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When you sell across borders, one three-letter code decides who pays for shipping, who covers insurance, who clears customs, and who carries the risk if the container is lost. That code is your Incoterm.
This guide covers all 11 Incoterms 2020, the buyer and seller obligations behind each term, and how to choose the right one for shipments into the UAE and the wider GCC.
It also settles a question that keeps surfacing in search results: whether an Incoterms 2025 exists. It does not, and the reason matters for any contract you are drafting now.
Incoterms cover the delivery point, the moment risk transfers, who arranges transport and insurance, and who handles export and import customs formalities.
They do not cover price, payment method, transfer of title, or product liability. Those belong in the wider sale contract
The 11 Incoterms are split into two groups by transport mode. Seven work for any mode of transport, including road, rail, air, sea and multimodal movements. Four apply only to sea and inland waterway freight. The table below sets out all 11 side by side.
Code | Full name | Mode | Meaning | Freight paid by | Export customs | Import customs | Risk transfers at |
|---|---|---|---|---|---|---|---|
EXW | Ex Works | Any | Buyer collects from the seller's premises | Buyer | Buyer | Buyer | At the seller's named premises, once goods are placed at the buyer's disposal |
FCA | Free Carrier | Any | Seller delivers to a carrier named by the buyer | Buyer | Seller | Buyer | On delivery to the named carrier or named place |
CPT | Carriage Paid To | Any | Seller pays carriage to the named destination | Seller | Seller | Buyer | On handover to the first carrie |
CIP | Carriage and Insurance Paid To | Any | CPT plus seller-arranged insurance | Seller | Seller | Buyer | On handover to the first carrier |
DAP | Delivered at Place | Any | Seller delivers ready for unloading at destination | Seller | Seller | Buyer | At the named destination, before unloading |
DPU | Delivered at Place Unloaded | Any | Seller delivers and unloads at destination | Seller | Seller | Buyer | At the named destination, once unloaded |
DDP | Any | Seller delivers cleared, with duties and taxes paid | Seller | Seller | Seller | At the named destination, before unloading | |
FAS | Free Alongside Ship | Sea/inland waterway | Seller delivers alongside the vessel | Buyer | Seller | Buyer | Alongside the vessel at the port of shipment |
FOB | Free on Board | Sea/inland waterway | Seller loads the goods on board the vessel | Buyer | Seller | Buyer | Once the goods are on board the vessel |
CFR | Cost and Freight | Sea/inland waterway | Seller pays freight to the destination port | Seller | Seller | Buyer | Once the goods are on board the vessel |
CIF | Cost, Insurance and Freight | Sea/inland waterway | CFR plus seller-arranged insurance | Seller | Seller | Buyer | Once the goods are on board the vessel |
These seven terms work for road, rail, air, sea and multimodal shipments, which makes them the default for containerized and air freight into the GCC.
The buyer collects from the seller's premises and handles everything after that. A UAE buyer purchasing servers EXW from a German factory arranges collection, export clearance and freight
The seller delivers to a carrier named by the buyer. Useful where the buyer already has a forwarder appointed at origin
The seller pays carriage to a named destination, but risk passes to the buyer at the first carrier
CPT plus insurance arranged by the seller, at Institute Cargo Clauses (A) level
The seller delivers to the named address ready for unloading. The buyer clears import.
As DAP, but the seller also unloads. It is the only term that obliges the seller to unload
The seller delivers cleared, with duties and taxes paid. This is the maximum seller obligation
These four terms apply only when goods move by sea or inland waterway, typically bulk cargo, project cargo and non-containerized ocean freight.
FAS, Free Alongside Ship: The seller delivers alongside the vessel at the named port of shipment.
FOB, Free on Board: The seller loads the goods on board. Cost and risk pass to the buyer from that point.
CFR, Cost and Freight: The seller pays freight to the destination port, but risk still passes on board at origin.
CIF, Cost, Insurance and Freight: CFR plus insurance arranged by the seller, at Institute Cargo Clauses (C) level.
Note:
FOB and CIF are the two most cited terms in this group and the pair buyers most often ask to compare.
A shipment discharging at Jebel Ali Port under CIF is insured to the port, not to the buyer's warehouse
Four questions settle most decisions
If the shipment moves only by sea or inland waterway, the four-term group applies. Anything else, including air and multimodal, points to the seven-term group
EXW gives the buyer control of the whole journey. DDP hands the seller control from factory to door. Every other term sits somewhere between the two.
An earlier transfer point reduces the seller's exposure and increases the buyer's. Match the transfer point to the party best placed to insure and manage the cargo at that stage.
This is the question most guides skip, and for GCC imports it decides whether the term you have chosen is workable at all.
DDP is often the buyer's preferred term. The seller handles everything to the door, and the buyer sees a single landed price. For foreign sellers shipping into the GCC, it also creates a problem that rarely surfaces until the goods are already in transit.
Under DDP into the UAE, the seller is legally responsible for import clearance, duties, VAT, and any permits required for the goods. Only a licensed importer in the destination country can discharge that responsibility. A foreign seller with no UAE entity and no local trade license cannot act as the DDP importer on its own account. It needs an Importer of Record to serve as the legal importer on its behalf, which is a different role from that of the buyer or consignee named on the transport documents.
The same principle applies in Saudi Arabia, Egypt, and Jordan under their own rules. Free zone delivery does not remove it either, because moving goods from a free zone such as JAFZA or DAFZA into the mainland is itself an import.
Incoterms 2020 is the current version. There is no Incoterms 2025.
The ICC revises the rules roughly once a decade, so the next edition, Incoterms 2030, is expected around January 2030. Incoterms 2010 remains valid where a contract cites it by name, which is worth checking on long-running supply agreements. Where a contract simply says "Incoterms" with no year, the 2020 edition is the sensible reading, though naming the year explicitly avoids the argument entirely.
If your contract points to DDP, or to any term that puts import clearance on the seller, the next question is who acts as the legal importer at destination.
IOR UAE holds that role across the UAE, Saudi Arabia, Egypt and Jordan. Send us the shipment details, and we will confirm what the term you have chosen requires on the ground.
No. Incoterms are voluntary. Once you cite one in a contract, it becomes part of the agreement and is enforceable on that basis. Most international contracts reference them because the alternative is drafting the same set of obligations from scratch.
Yes. Incoterms are recognized worldwide, including in the USA. American domestic contracts may also use shipment terms drawn from the Uniform Commercial Code, which are not the same thing, so it is worth stating which set applies.
The seller pays to bring the goods to the port of shipment and load them on board. From that point, the buyer pays the main freight, insurance, and everything downstream.
Usually not. DDP shifts more work to the seller, and the seller prices that work into the invoice. The cheaper term is whichever one puts clearance and delivery in the hands of the party that already has capability in the destination country.
FOB and CIF dominate ocean freight. DDP and EXW are more common in air freight and courier shipments. No single term is most used across all trade lanes.
