The Complete Guide to Incoterms® 2020 for International Shipping

Incoterms® 2020 for International Shipping

Understand buyer and seller responsibilities, reduce shipping risks, and choose the right Incoterms® 2020 rule for every international shipment.

Written by Hany Abdelaal
Founder & CEO – Live Freight
Logistics Leader Since 2008

8 min read • Last Updated: July 2026

Every International Shipment Begins with a Decision

Before cargo is collected or a freight quotation is approved, one question must be answered:

Who is responsible for each stage of the shipment?

That single decision determines who arranges transportation, who completes customs procedures, who pays shipping costs, and when responsibility for the cargo transfers from the seller to the buyer.

These responsibilities are defined by Incoterms® 2020—the international trade rules published by the International Chamber of Commerce (ICC).

Selecting the correct Incoterm helps both parties establish clear responsibilities before the shipment begins, reducing the risk of unexpected costs, customs issues, and contractual disputes.

Whether you're importing into Egypt, exporting internationally, or managing regular freight movements, understanding Incoterms is essential for making informed shipping decisions.

What You'll Learn

In this guide, you'll learn:

• What Incoterms® are.
• The responsibilities of buyers and sellers.
• The 11 official Incoterms® 2020 rules.
• Which rules apply to all transport modes and which are used only for sea freight.
• How to choose the most suitable Incoterm for your shipment.

Planning an International Shipment?

Before selecting an Incoterm, explore available freight routes to better understand your shipping options.

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Why Incoterms Matter

Incoterms establish a common language for international trade.

Instead of negotiating logistics responsibilities from scratch for every shipment, buyers and sellers can rely on internationally recognized rules that define who is responsible for transportation, customs formalities, insurance, freight costs, and shipment risk.

It's important to understand that Incoterms govern logistics responsibilities only. They do not define product ownership, payment terms, or the commercial contract between the trading parties.

For businesses new to international shipping, understanding the overall shipping process before selecting an Incoterm is highly recommended.

Recommended Reading

• International Shipping Process
• Bill of Lading Types

Incoterms at a Glance

The 11 Incoterms® 2020 rules are divided into two groups.

Choosing the correct group is the first step. The second is selecting the rule that best matches your commercial agreement and shipping method.

Let's look at each Incoterm individually.

EXW – Ex Works

Best For: Experienced buyers with established logistics operations.

How It Works

The seller makes the goods available at the agreed location. From that point onward, the buyer assumes responsibility for almost every stage of the shipment.

Buyer Responsibilities

• Arrange transportation.

• Complete export and import procedures where applicable.

• Arrange cargo insurance.

• Pay freight, duties, taxes, and destination charges.

Seller Responsibilities

• Prepare the goods.

• Make the cargo available for collection.

When to Use

Choose EXW when the buyer has the experience and resources to manage the shipment from origin to final delivery.

FCA – Free Carrier

Best For: Containerized shipments and multimodal transport.

How It Works

The seller delivers the cargo to the buyer's nominated carrier at the agreed location and completes export customs clearance. Risk transfers once the carrier receives the goods.

Buyer Responsibilities

• Arrange the main transportation.

• Complete import procedures.

• Pay destination charges.

Seller Responsibilities

• Prepare the cargo.

• Deliver it to the nominated carrier.

• Complete export customs clearance.

When to Use

FCA is generally the preferred option for container shipments because it reflects modern freight forwarding practices.

Expert Tip: FCA is usually a better choice than FOB for containerized cargo because responsibility transfers before the cargo is loaded onto the vessel.

CPT – Carriage Paid To

Best For: Buyers who want the seller to arrange the main transportation.

How It Works

The seller pays the transportation costs to the agreed destination, while shipment risk transfers once the goods are handed to the first carrier.

Buyer Responsibilities

• Accept shipment risk after handover to the first carrier.

• Complete import clearance.

• Pay duties and destination charges.

Seller Responsibilities

• Arrange and pay for transportation.

• Complete export customs clearance.

When to Use

CPT works well for multimodal and air freight shipments where the seller has access to competitive freight rates.

CIP – Carriage and Insurance Paid To

Best For: High-value cargo requiring insurance.

How It Works

CIP follows the same structure as CPT but requires the seller to arrange cargo insurance in addition to transportation.

Buyer Responsibilities

• Accept shipment risk after delivery to the first carrier.

• Complete import customs procedures.

• Pay destination duties and taxes.

Seller Responsibilities

• Arrange transportation.

• Arrange cargo insurance.

• Complete export customs clearance.

When to Use

Choose CIP when additional insurance protection is important because of the cargo's value or sensitivity.

Incoterms® 2020 Comparison Table

The table below provides a quick overview of the responsibilities assigned under each Incoterm. Use it as a reference when comparing shipping options or negotiating international trade agreements.

Note: Export customs procedures under EXW may not be practical in some countries where only the local exporter is permitted to complete export formalities.

How to Choose the Right Incoterm

The best Incoterm depends on your shipment, the agreed commercial terms, and how much responsibility each party is prepared to accept.

Use the following recommendations as a starting point.

Choose EXW if:

• You control the logistics process from origin to destination.

• You have an experienced freight partner at origin.

Choose FCA if:

• You're shipping containerized cargo.

• You want a balanced allocation of responsibilities.

• A freight forwarder manages the shipment.

Choose CPT or CIP if:

• The seller is arranging international transportation.

• The shipment moves by air or multimodal transport.

• Insurance is important for valuable cargo (CIP).

Choose DAP if:

• You want the seller to deliver the shipment to the agreed destination.

• You prefer to handle import customs clearance yourself.

Choose DDP if:

• You want a fully managed delivery solution.

• The seller can legally complete import procedures in the destination country.

Choose FOB, CFR, or CIF if:

• You're shipping conventional ocean freight.

• Both parties understand maritime shipping responsibilities.

Common Mistakes to Avoid

Many shipping issues begin long before the cargo moves. Choosing the wrong Incoterm can lead to unexpected costs, delays, or disputes.

Avoid these common mistakes:

• Using FOB for container shipments instead of FCA.

• Confusing payment responsibility with shipment risk.

• Failing to specify the named place or destination.

• Assuming cargo insurance is included under every Incoterm.

• Choosing DDP without confirming local import requirements.

Continue Your Shipping Journey

Understanding Incoterms is only one part of international shipping. Choosing the right transport solution, preparing the correct documentation, and planning customs procedures are equally important.

To continue your shipment planning, explore these resources:

• Freight Forwarding Egypt – Learn how freight forwarders coordinate international shipments.

• Shipping to Egypt – Understand import procedures, documentation, and freight options.

• Export from Egypt – Explore export planning and shipping guidance.

• Shipping Cost Egypt – Learn which factors influence international freight pricing.

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Whether you're importing, exporting, or comparing freight options, Live Freight helps businesses find reliable logistics solutions for international shipping.

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