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Import and export guide: shipping terms

What is the difference between FOB and CIF?

FOB (Free On Board) and CIF (Cost Insurance and Freight) are both Incoterms® 2020 rules for sea and inland waterway transport. Under both, risk passes to the buyer once the goods are on board the ship at the port of shipment. The difference is cost. Under CIF Mombasa the seller pays the freight and minimum insurance to Mombasa; under FOB the buyer arranges and pays both.

Placeholder: confirm each rule's delivery and risk point against ICC's Incoterms® 2020 text before ADL approves the page

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Who pays import duty under DAP and DDP?

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Under DAP (Delivered at Place) the buyer clears the goods for import and pays the duties and taxes. Under DDP (Delivered Duty Paid) the seller does. Goods coming into Kenya on DDP still need a correct declaration to the Kenya Revenue Authority (KRA) and payment through official channels, so ask the seller exactly how both will happen before you sign. DPU is DAP plus unloading.

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What are Incoterms® rules?

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Incoterms® rules are eleven three-letter trade terms published by the International Chamber of Commerce (ICC) since 1936. The current edition is the Incoterms® 2020 rules, in force since 1 January 2020. Each rule says who arranges and pays for carriage, insurance and clearance. It also says where the risk passes from seller to buyer. Ownership and payment? The rules say nothing about either.

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FCA or FOB for a container?

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For a container, FCA often fits better than FOB. A container is usually handed to the carrier at a depot or terminal before loading. Under FOB the seller carries the risk until it is on board. Under FCA (Free Carrier) risk passes at handover. The Incoterms® 2020 rules also let FCA parties agree that the buyer's carrier issues an on-board bill of lading to the seller, which a bank may ask for.

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Who carries the risk under each Incoterms® rule?

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Risk passes from seller to buyer at the delivery point each rule names. It passes at the seller's end under the E and F rules (EXW, FCA, FAS, FOB) and under the C rules (CPT, CIP, CFR, CIF), even though under a C rule the seller pays the main carriage. Under the D rules (DAP, DPU, DDP) it passes at the destination.

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Sources: ICC, Incoterms® 2020, US International Trade Administration

Last checked: 12 October 2026

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Shipping terms explorer

Pick a rule and see who pays at each stage

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The shipping terms explorer shows, for each of the eleven Incoterms® rules, who pays at six stages of a shipment and where the risk passes to the buyer. Pick the rule your contract names.

Placeholder: ADL approval of the explorer content and the rules ADL's clients use most (Q-36)

EXW, Ex Works

The buyer collects from the seller's premises and does everything else, export clearance included.

  1. Export clearanceBuyer pays
  2. Loading at originBuyer pays
  3. Main carriageBuyer pays
  4. Unloading at destinationBuyer pays
  5. Import clearance and dutiesBuyer pays
  6. Delivery to the buyerBuyer pays

Risk passes hereAt the seller's premises, goods not loaded

Source: ICC Incoterms® 2020. Last checked 12 October 2026.

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A plain summary, not legal advice. Your contract and ICC's text decide.

Incoterms® and the Incoterms® 2020 logo are trademarks of ICC. Use of these trademarks does not imply association with, approval of or sponsorship by ICC. The Incoterms® Rules are protected by copyright owned by ICC.

The table shows all eleven rules at once.

RuleExport clearanceLoading at originMain carriageUnloading at destinationImport clearance and dutiesDelivery to the buyerRisk passes here
EXW, Ex WorksBuyer paysBuyer paysBuyer paysBuyer paysBuyer paysBuyer paysAt the seller's premises, goods not loaded
FCA, Free CarrierSeller paysSeller pays at the seller's premises, otherwise buyer paysBuyer paysBuyer paysBuyer paysBuyer paysWhen the goods are handed to the buyer's carrier at the named place
CPT, Carriage Paid ToSeller paysSeller paysSeller paysBuyer pays, unless the seller's carriage contract includes itBuyer paysBuyer paysWhen the goods are handed to the first carrier
CIP, Carriage and Insurance Paid ToSeller paysSeller paysSeller pays, with insurance to Institute Cargo Clauses (A)Buyer pays, unless the seller's carriage contract includes itBuyer paysBuyer paysWhen the goods are handed to the first carrier
DAP, Delivered at PlaceSeller paysSeller paysSeller paysBuyer paysBuyer paysSeller pays, to the named placeAt the named place, ready for unloading
DPU, Delivered at Place UnloadedSeller paysSeller paysSeller paysSeller paysBuyer paysSeller pays, to the named placeAt the named place, once unloaded
DDP, Delivered Duty PaidSeller paysSeller paysSeller paysBuyer paysSeller paysSeller pays, to the named placeAt the named place, ready for unloading
FAS, Free Alongside ShipSeller paysBuyer paysBuyer paysBuyer paysBuyer paysBuyer paysAlongside the ship at the port of shipment
FOB, Free On BoardSeller paysSeller paysBuyer paysBuyer paysBuyer paysBuyer paysOn board the ship at the port of shipment
CFR, Cost and FreightSeller paysSeller paysSeller paysBuyer pays, unless the seller's carriage contract includes itBuyer paysBuyer paysOn board the ship at the port of shipment
CIF, Cost Insurance and FreightSeller paysSeller paysSeller pays, with insurance to Institute Cargo Clauses (C) at leastBuyer pays, unless the seller's carriage contract includes itBuyer paysBuyer paysOn board the ship at the port of shipment

A plain summary, not legal advice. Your contract and ICC's text decide.

Incoterms® and the Incoterms® 2020 logo are trademarks of ICC. Use of these trademarks does not imply association with, approval of or sponsorship by ICC. The Incoterms® Rules are protected by copyright owned by ICC.

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