What Do FOB, FCA, DAP, CIF, EXW and CPT Mean?

Incoterms rules allocate delivery tasks, transport costs and cargo risk between seller and buyer. The person paying the main freight is not always the person carrying the risk during that journey. Before accepting a quotation, record the rule, edition and precise named place, then reconcile the transport quote with it. A three-letter abbreviation alone leaves important questions unanswered.

Compare the six rules before comparing prices

The table is a working orientation to Incoterms 2020, not a replacement for the full rule or advice on your contract. Delivery is the contractual risk handoff; it may happen well before arrival.

Rule	Delivery and risk handoff	Main transport and important cost questions
EXW — Ex Works	Goods made available at the named point, not loaded	Buyer arranges carriage and export/import clearance; confirm practical ability to export
FCA — Free Carrier	At seller’s premises, loaded on buyer’s transport; elsewhere, ready for unloading to buyer’s nominated carrier/person	Buyer arranges main carriage; seller handles export clearance
FOB — Free On Board	On board the nominated vessel at the shipment port	Buyer arranges main sea carriage; seller handles export clearance
CIF — Cost, Insurance and Freight	On board at shipment port, although the name specifies a destination port	Seller buys carriage and required insurance to the destination port; risk transfers earlier
CPT — Carriage Paid To	Handover to the carrier at the agreed delivery point	Seller pays carriage to named destination; the risk handoff is separate
DAP — Delivered at Place	At named destination, on arriving transport ready for unloading	Seller arranges carriage there; buyer handles unloading and import clearance/duties

FOB and CIF are sea/inland-waterway rules. EXW, FCA, CPT and DAP can cover different modes. ICC cautions that FCA is the relevant alternative to examine when container cargo is handed to a carrier at a terminal before vessel loading. Do not rename an airport delivery “FOB airport” and assume the maritime rule still describes it.

Separate the destination from the risk point

Under a C rule such as CPT or CIF, paying freight towards a destination does not keep cargo risk with the seller until arrival. Ask for both locations in your order record: the delivery/risk point and the place to which carriage is paid. With CIF, obtain the insurance document and examine covered risks, exclusions, insured amount, claims procedure and whether additional cover is needed. A reference to insurance is not a guarantee that every loss will be paid.

Incoterms do not settle ownership transfer, payment timing, product acceptance or all remedies for breach. Keep these in the sales contract. If a purchase order, supplier quotation and freight booking describe different terms, have the contracting parties resolve the wording before collection; a forwarder’s email cannot silently amend the sale.

Write a usable quotation line

A working pattern is FCA [full collection address and agreed loading point], Incoterms 2020. Replace the bracketed text with the actual agreed place; it is not a completed contract clause. For a destination rule, give the full receiving point and access conditions rather than only a city name.

Keep a separate charge schedule:

Question	Evidence to keep
Who books collection and main carriage?	Named booking party, carrier quote and collection instructions
Which origin/destination handling is included?	Itemized quote, including exclusions and unloading assumptions
Who can perform export and import formalities?	Exporter/importer identities and broker confirmation
Who bears storage or delay charges in the stated circumstances?	Agreed allocation and notice process
What demonstrates delivery?	Agreed carrier receipt or transport document
Who arranges insurance and handles a claim?	Policy/certificate and claims contact

EXW deserves particular care when the foreign buyer cannot readily handle export formalities. Under FCA at the seller’s premises the seller loads; at another named place the delivery condition differs. These details can change the practical handoff without changing the abbreviation.

Confirm the wording with the right people

Ask the seller to confirm the sales clause, the forwarder to price the agreed route, and the broker to identify the required customs roles and documents. Have a qualified trade or legal adviser resolve a disputed clause or unusual modification. This guide helps you prepare those questions; it does not decide the legal effect of an individual contract.

Compare the final cargo description, packing dimensions and weights with the quotation before dispatch. Keep payment milestones and inspection release separate from transport-risk allocation: a freight term does not demonstrate that the goods meet the specification.

Next steps

Check cargo weight boundaries · Prepare carton marks · Write the product specification

Sources

• ICC — Incoterms 2020 rules for any mode of transport
• ICC — Incoterms 2020 sea and inland waterway rules
• ICC — Incoterms 2020 questions and answers