Incoterms 2020 assigns delivery tasks, costs and risk between buyer and seller. It does not set the goods price, transfer ownership or replace customs law. For an importer, the useful comparison is practical: where delivery occurs, who contracts carriage, and who must complete import formalities. That is where FCA, FOB, DAP and DDP produce very different landed-cost files.
What should an importer compare before accepting an Incoterms 2020 quote?
Compare the named place, the handover point, carriage control, unloading and import clearance before comparing the unit price. The UK government's Incoterms guidance says the terms clarify the tasks, costs and risks in delivery. Put the exact terminal, port or warehouse in the contract. “DAP Europe” is not a usable delivery point.
| Term | Delivery and risk point | Carriage and import work | Use with care when |
|---|---|---|---|
| FCA | Seller hands goods to the buyer-nominated carrier or person at the named point | Buyer controls main carriage and import process | Container or multimodal shipment needs a clear handover point |
| FOB | Seller places goods on board at the named port | Buyer arranges sea carriage and import process | The shipment is not sea or inland-waterway transport |
| DAP | Goods arrive ready for unloading at the named destination | Seller carries to destination; buyer unloads and handles import | Buyer has not prepared customs, tax and broker instructions |
| DDP | Goods arrive at the named destination under the seller's maximum delivery obligation | Seller bears delivery costs and risks, including import clearance and duties under the term | Destination law requires the buyer or another party to be importer of record |
Why is FCA often the cleaner starting point for an importer?
FCA is an any-mode term. The seller delivers to the carrier or other person nominated by the buyer at the named place, then risk passes at that delivery point. It works well when the buyer wants its own freight forwarder, consolidation plan or cargo insurance. The official mode grouping places FCA among terms for any mode or modes of transport.
FCA is only controlled if the purchase order states the named place and practical handover. Ask whether the goods are handed to the carrier at the factory, a forwarder's depot, an airport terminal or a port facility. Then align packing, export documentation, cargo collection time and the carrier nomination with that point.
When is FOB the wrong comparison?
FOB is limited to sea and inland-waterway transport. Under the official guidance, the seller places the goods on board the vessel nominated by the buyer at the named port. That makes FOB a marine delivery term, not a shortcut label for every shipment leaving a port. For containerised or multimodal movements, assess FCA first and document the actual carrier handover.
Do not treat “FOB price” as a complete landed-cost answer. The buyer still needs the ocean or inland-waterway freight arrangement, cargo insurance decision, destination customs entry, duties, import VAT where applicable, terminal costs and inland transport. A quote can be competitive while the file behind it is incomplete.
What does DAP leave for the importer to do?
Under DAP, the seller brings the goods to the named destination ready for unloading. The importer should expect to arrange unloading and to control import clearance, duties and destination tax steps. ICC confirms that DAP differs from DPU because the seller does not unload under DAP. The current framework is still Incoterms 2020, as verified on 21 July 2026.
DAP can simplify freight coordination, but it raises the cost of an unprepared arrival. Before goods move, appoint the customs broker, confirm the importer identifier and commodity classification, identify licences or product controls, and agree who receives the arrival notice. Delivery at a warehouse does not solve a missing customs file.
Does DDP remove every import responsibility from the buyer?
No. DDP gives the seller the broadest delivery obligation in this comparison. The seller bears the costs and risks of bringing goods to the named destination and must clear them for export and import under the term. The official DDP summary makes that allocation clear. It does not override destination-country rules on who can be importer of record, claim VAT or hold a licence.
Before accepting DDP, request a written operating map: named importer of record, customs declarant, tariff classification owner, duty and tax payer, record retention owner, and treatment of an inspection or a customs value adjustment. If these answers stay vague, DDP is a commercial label without an implementation plan.
How should an importer build a reliable landed-cost file?
Use the Incoterm as one input, then separate product cost, freight, insurance, terminal and handling charges, duties, import VAT, broker fees, inspections, inland delivery and possible storage. The UK's official customs-value guidance shows why freight and the place of introduction matter to customs-value analysis. The applicable calculation always depends on the destination jurisdiction and transaction facts.
- Write the three-letter term plus a precise named place or port and “Incoterms 2020”.
- Confirm the risk handover and cargo-insurance owner in the purchase order.
- Assign export, import, broker, tax and product-compliance tasks to named parties.
- Run a small pilot shipment before scaling a new supplier or term.
Frequently asked questions
Does Incoterms 2020 decide who owns the goods?
No. The rules address delivery, cost and risk allocation. Title transfer should be handled in the sale contract.
Is FOB suitable for air freight?
No. The official grouping limits FOB to sea and inland-waterway transport. Review FCA or another any-mode term for air freight.
Who pays duty under DAP?
DAP leaves import clearance and the related import process with the buyer. Confirm the exact destination-law treatment before shipment.
Can every supplier offer DDP?
A supplier can quote DDP, but the destination-side importer, licence, customs and tax arrangements must work in practice. Verify them before payment.
Corpenza can coordinate import and export implementation support and the pre-order compliance file before goods ship. For a transaction-specific review, contact Corpenza. This is general information, not legal, customs or tax advice.
