Any mode of transport
Seven rules — EXW, FCA, CPT, CIP, DAP, DPU and DDP — work for road, rail, air, sea or any combination. If your Botswana or SADC load never touches a ship, or moves in a container door to door, these are the rules you want.
Incoterms 2020 explained
Incoterms are the three-letter shorthand that decides who pays for what and, more importantly, who is holding the risk when something goes wrong. Get the term right and a shipment runs quietly from door to door. Get it wrong and you find out at the worst possible moment that the goods were your responsibility a thousand kilometres before you thought they were. This is a practical guide to all eleven Incoterms 2020 rules, written for people moving real cargo in and out of South Africa.
Incoterms 2020 are published by the International Chamber of Commerce and are the version in force today. They settle three things: which party arranges and pays for carriage, which party arranges and pays for insurance, and the precise point at which the risk of loss or damage passes from seller to buyer. They deliberately do not cover payment terms, currency, ownership or title, or what happens in a dispute — those belong in the sale contract, not in the Incoterm.
The two families
The eleven rules split into two groups. Choosing from the correct group is the first thing to get right.
Sea and inland waterway only
Four rules — FAS, FOB, CFR and CIF — are written around a ship and a port. They only make sense for bulk and break-bulk cargo handed over at the quay. Using FOB or CIF for a container is one of the most common and costly mistakes in the trade.
Who is responsible for what
Reading down the table, responsibility shifts from the buyer doing almost everything (EXW) to the seller doing almost everything (DDP). "Risk transfers" is the point at which loss or damage becomes the buyer's problem, whatever the paperwork says.
| Rule | Mode | Export clearance | Main carriage | Insurance | Import clearance & duty | Risk transfers |
|---|---|---|---|---|---|---|
| EXW — Ex Works | Any | Buyer | Buyer | Buyer (optional) | Buyer | At seller's premises, before loading |
| FCA — Free Carrier | Any | Seller | Buyer | Buyer (optional) | Buyer | When handed to the buyer's carrier |
| FAS — Free Alongside Ship | Sea | Seller | Buyer | Buyer (optional) | Buyer | Alongside the vessel at load port |
| FOB — Free On Board | Sea | Seller | Buyer | Buyer (optional) | Buyer | Once on board the vessel |
| CFR — Cost and Freight | Sea | Seller | Seller | Buyer (optional) | Buyer | Once on board the vessel |
| CIF — Cost, Insurance and Freight | Sea | Seller | Seller | Seller (min. Clauses C) | Buyer | Once on board the vessel |
| CPT — Carriage Paid To | Any | Seller | Seller | Buyer (optional) | Buyer | When handed to the first carrier |
| CIP — Carriage and Insurance Paid To | Any | Seller | Seller | Seller (min. Clauses A) | Buyer | When handed to the first carrier |
| DAP — Delivered at Place | Any | Seller | Seller | Seller (optional) | Buyer | At the named place, ready for unloading |
| DPU — Delivered at Place Unloaded | Any | Seller | Seller | Seller (optional) | Buyer | At the named place, once unloaded |
| DDP — Delivered Duty Paid | Any | Seller | Seller | Seller (optional) | Seller | At the named place, ready for unloading |
Note that in the C rules — CFR, CIF, CPT and CIP — the seller pays the freight but risk still passes early, at the load port or first carrier. The seller is paying for a journey during which the goods are already at the buyer's risk. That split catches people out constantly.
The eleven rules, one by one
EXW — Ex Works
The seller simply makes the goods available at their own premises. The buyer arranges everything from loading onward, including export clearance in a country where they usually have no presence. Maximum obligation on the buyer, minimum on the seller. Convenient to quote, awkward to actually run.
FCA — Free Carrier
The seller clears the goods for export and hands them to a carrier nominated by the buyer, either at the seller's premises or another named point. The workhorse of container and road freight, and the sensible replacement for EXW and FOB in most modern trades.
FAS — Free Alongside Ship
The seller delivers the goods alongside the vessel at the named port. Suited to bulk and project cargo loaded by crane. Rarely the right choice for anything containerised.
FOB — Free On Board
The seller delivers on board the vessel and clears for export; risk passes once the goods are on board. Correct only for non-containerised sea freight, though it is still widely — and wrongly — used for containers.
CFR — Cost and Freight
As FOB, but the seller also pays the ocean freight to the destination port. Insurance is the buyer's call. Risk still passes at the load port, so the buyer should insure from day one.
CIF — Cost, Insurance and Freight
As CFR, with the seller also buying marine insurance — but only the minimum Institute Cargo Clauses C. For anything of value the buyer should arrange wider cover of their own.
CPT — Carriage Paid To
The any-mode equivalent of CFR. The seller pays carriage to the named destination; risk passes when the goods reach the first carrier. Common for road and multimodal moves into the region.
CIP — Carriage and Insurance Paid To
CPT plus insurance, and under Incoterms 2020 that insurance must be the broad Institute Cargo Clauses A. A strong choice when the seller organises transport but the buyer wants proper cover built in.
DAP — Delivered at Place
The seller delivers, ready for unloading, at a named place in the destination country — a warehouse in Gaborone, a yard in Francistown. Import clearance and duty stay with the buyer. Clean and popular for road freight into SADC.
DPU — Delivered at Place Unloaded
The only rule where the seller must unload at destination. Formerly DAT, renamed in 2020 and widened to any place, not just a terminal. Use it where the seller controls the unloading point.
DDP — Delivered Duty Paid
Maximum obligation on the seller: delivered to the buyer's door with export and import clearance and duties all handled. Only workable if the seller can actually clear and, where required, register for VAT in the destination country.
What changed in Incoterms 2020
If you are working from an older contract template, these are the differences that matter.
DAT became DPU
Delivered at Terminal was renamed Delivered at Place Unloaded and broadened so the named place no longer has to be a terminal. The substance is the same: the seller unloads at destination.
Different insurance for CIP and CIF
CIP now requires the wide Institute Cargo Clauses A, while CIF stays at the minimum Clauses C. Two similar-looking terms now carry very different cover.
FCA and the on-board bill of lading
Under FCA the parties can now agree that the buyer instructs the carrier to issue an on-board bill of lading to the seller — helpful when a letter of credit demands one but the goods moved on FCA terms.
Own transport is recognised
The rules now acknowledge that the buyer or seller may carry the goods with their own vehicles rather than always contracting a third-party carrier.
Security and cost clarity
Security-related clearance obligations are spelled out under each rule, and every rule now gathers all of a party's costs into one place so nothing is double-charged at handover.
Choosing the right term for a South African trade
The best Incoterm is the one that leaves each obligation with the party actually able to perform it. A few rules of thumb we give clients:
Exporting? Avoid EXW
EXW leaves you unable to prove export for your VAT zero-rating and hands loading and export clearance to a buyer with no local footprint. FCA gives the buyer the same control while keeping you compliant with SARS.
Importing? Be careful with DDP
DDP only works if your supplier truly understands South African customs and VAT. If they do not, the shipment stalls at the port. DAP or DPU deliver the goods to you while leaving clearance with the party who knows SARS — usually you or your forwarder.
Containers move on FCA, CPT or CIP
Reserve FOB, CFR and CIF for genuine port-to-port bulk. For containers and multimodal moves, the any-mode C and F terms match how the cargo actually travels and where risk really sits.
Always name the place precisely
"DAP Gaborone" is not enough. Name the exact delivery address and, for the C rules, the exact destination. A vague place is where cost overruns and disputes are born.
Frequently asked questions
What are Incoterms 2020?
Eleven three-letter rules from the International Chamber of Commerce that define who arranges and pays for carriage, insurance and customs clearance, and where the risk of loss or damage passes from seller to buyer. They do not cover payment, ownership or title.
How many Incoterms are there?
Eleven. Seven work for any mode of transport — EXW, FCA, CPT, CIP, DAP, DPU and DDP — and four are for sea and inland waterway only: FAS, FOB, CFR and CIF.
What is the difference between Incoterms 2010 and 2020?
DAT was renamed DPU, CIP was lifted to Institute Cargo Clauses A insurance while CIF stayed at Clauses C, FCA gained an option for an on-board bill of lading, and the rules now recognise carriage on own transport and set out security obligations more clearly.
Do Incoterms decide who pays VAT and duty on import?
Under every rule except DDP, import clearance, duty and VAT are the buyer's responsibility. Under DDP the seller carries them, and unless separately agreed, import VAT too.
Which term is best for road freight into Botswana or the rest of SADC?
DAP is usually the cleanest for delivered road freight — the goods arrive at the named place and the importer handles clearance and VAT. CPT or CIP suit cases where the seller organises transport but clearance stays local.
Not sure which Incoterm to quote?
We structure the terms with you before the goods move, so cost and risk sit where they should and nothing surprises you at the border. Zeen Freight handles road, sea and air freight and both sides of customs across 80+ countries.