Commercial terms
Incoterms for food imports: who carries what
An Incoterm is three letters that decide who pays for what, who carries the risk, and who is responsible for which document. Choosing the wrong one is not a pricing mistake - it is a liability mistake.
Last reviewed: 20 September 2026
01
The eleven rules
Incoterms 2020, published by the International Chamber of Commerce, has eleven rules in two groups. The split is by mode of transport, and it matters more than most buyers realise.
| Group | Rules | Use for |
|---|---|---|
| Any mode of transport | EXW, FCA, CPT, CIP, DAP, DPU, DDP | Containerised cargo, air, road, rail, and multimodal movements |
| Sea and inland waterway only | FAS, FOB, CFR, CIF | Bulk and break-bulk loaded aboard a vessel |
DPU replaced the former DAT rule in the 2020 revision. Insurance cover also differs: CIP now requires the wider Institute Cargo Clauses (A), while CIF requires only the minimum (C).
02
The container mistake
FOB and CIF are written for goods loaded aboard a vessel. A container is not loaded aboard by the seller - it is handed over at a terminal, days before the ship sails, and the seller loses control of it at that point.
For containerised food, FCA, CPT or CIP describe what actually happens; FOB and CIF do not. The ICC says so directly. Most food is still traded FOB or CIF out of habit, which leaves a gap where the container sits at the terminal and neither party is clearly carrying the risk.
This is not academic. If a reefer container loses power in a terminal stack before loading, the rule you chose decides whose loss that is.
03
Where cost and risk part company
The most common misunderstanding is assuming cost and risk transfer at the same point. Under CIF and CIP they do not: the seller pays freight and insurance to the destination, but risk passes to the buyer much earlier, at origin.
| EXW | Buyer takes everything from the seller premises. Rarely appropriate for export, because the buyer cannot complete export formalities in the seller country. |
|---|---|
| FCA | Seller delivers, cleared for export, to a named place. The sensible default for containers. |
| CPT / CIP | Seller pays carriage to destination; risk passes at origin on handover to the first carrier. CIP adds wide insurance cover. |
| DAP / DPU | Seller carries risk to the destination. DPU is the only rule where the seller must unload. |
| DDP | Seller carries everything including import duty and clearance. Demanding for a seller who is not established in the destination country. |
04
Three things Incoterms never decide
- Ownership. Incoterms govern cost, risk and obligations. Transfer of title is a matter for the sales contract and the applicable law, and it is not implied by the three letters.
- Payment. The Incoterm says nothing about when or how you pay. Those are separate contractual terms, agreed per programme.
- What happens if the goods are non-conforming. Remedies, inspection rights and rejection all sit in the contract, not the Incoterm.
05
How we work with it
- The rule, and the named place that completes it, are fixed on the programme specification before a shipment is booked - an Incoterm without a named place is incomplete
- For containerised food we set out where risk actually transfers rather than assuming the buyer reads it the same way
- The document set is built to the rule chosen, so the party responsible for each document holds it before the goods move
Source and scope
Source. Incoterms 2020, published by the International Chamber of Commerce. Incoterms is a trademark of the ICC; the rules themselves are the authoritative text.
Scope. General information for commercial buyers, not legal advice. The applicable rule, named place and contractual terms for any shipment are those written into the contract of sale.
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