Incoterms® are the standard trade terms published by the International Chamber of Commerce (ICC). The current version, Incoterms® 2020, contains 11 rules. Each one answers three questions: who arranges and pays for each leg of transport, who handles export and import customs, and at which point the risk of loss or damage passes from seller to buyer. Choosing the wrong one is one of the most common — and most expensive — mistakes in international trade.
The 11 rules at a glance
Incoterms 2020 are split into two families.
Rules for any mode of transport (including multimodal)
- EXW – Ex Works: the seller makes the goods available at its premises. The buyer handles everything, including loading and export clearance.
- FCA – Free Carrier: the seller hands the goods, cleared for export, to the buyer’s carrier at an agreed place.
- CPT – Carriage Paid To: the seller pays the main carriage to the destination, but risk passes when the goods are handed to the first carrier.
- CIP – Carriage and Insurance Paid To: as CPT, plus insurance. Under Incoterms 2020, CIP requires a high level of cover (Institute Cargo Clauses A).
- DAP – Delivered at Place: the seller delivers to the named destination, ready for unloading; the buyer clears import customs.
- DPU – Delivered at Place Unloaded: as DAP, but the seller also unloads. DPU replaced DAT in 2020.
- DDP – Delivered Duty Paid: the seller delivers cleared for import, with duties and taxes paid.
Rules for sea and inland waterway transport only
- FAS – Free Alongside Ship: goods placed alongside the vessel at the port of loading.
- FOB – Free On Board: goods loaded on board the vessel; risk passes at that moment.
- CFR – Cost and Freight: the seller pays sea freight to the destination port; risk still passes on board at origin.
- CIF – Cost, Insurance and Freight: as CFR, plus minimum insurance (Institute Cargo Clauses C).
The detail most people miss: cost and risk do not move together
With the "C" rules (CPT, CIP, CFR, CIF), the seller pays freight all the way to destination, yet the buyer bears the risk from the moment the goods are handed over at origin. If a container is damaged at sea under CIF Casablanca, it is the Moroccan buyer who must claim — on the insurance the seller bought. That is why the level of insurance matters.
Containers: prefer FCA to FOB
FOB was designed for cargo lifted over the ship’s rail. For containers, the seller usually hands the box to the terminal days before loading, and loses control of it. The ICC recommends FCA for containerised goods, so that risk passes when the container is handed to the carrier or terminal.
Which Incoterm for Moroccan importers?
- FCA or FOB (or EXW with care) lets you appoint your own forwarder, control freight costs and transit times, and consolidate several suppliers.
- CIF/CFR is convenient, but the destination charges at the Moroccan port are often higher than expected and you do not choose the carrier.
- DDP into Morocco is rarely practical for a foreign seller, who would need to handle Moroccan import clearance and VAT.
Which Incoterm for Moroccan exporters?
- FCA Casablanca/Tanger keeps your responsibility short and clear.
- CPT/CIP or CFR/CIF make your offer more attractive to buyers who want a delivered price, and let you negotiate freight with your forwarder.
- DAP works well for road freight to Europe, where you control the truck to the customer’s door.
Three classic mistakes
- Leaving out the place: "FOB" alone is meaningless. Always write the rule, the precise place and the version, e.g. FCA Casablanca Port, Incoterms® 2020.
- Using EXW for exports from Morocco when the foreign buyer cannot handle Moroccan export clearance.
- Assuming Incoterms cover payment or ownership: they do not. Payment terms and transfer of title belong in the sales contract.
Need help choosing?
We quote every major Incoterm — door-to-door, port-to-port or anything in between — by sea, air and road. Tell us your Incoterm and route and we will show you exactly which costs fall on you.
