What are Incoterms?
Incoterms (International Commercial Terms) are globally recognized rules published by the International Chamber of Commerce (ICC). They define the roles, responsibilities, and costs between buyers and sellers in international trade, clarifying who is responsible for transportation, insurance, documentation, customs clearance, and risk transfer at each stage of the shipping process. For anyone exporting or importing goods, especially perishables, understanding Incoterms is essential for secure, smooth, and efficient cross-border transactions.
Why Incoterms Matter in Perishable Logistics
Shipping temperature-sensitive goods like fresh fruit, vegetables, or flowers leaves no room for uncertainty. Incoterms 2020 set clear boundaries for cost, risk, and responsibility, helping you:
- Avoid misunderstandings and disputes
- Ensure compliance and timely customs clearance
- Protect product quality by defining handover points
- Plan insurance and documentation efficiently
For perishable logistics, choosing the right Incoterm can be the difference between a successful delivery and costly spoilage.
Incoterms 2020 Overview
- Visual timeline from seller’s premises to buyer’s destination
- Clear breakdown of who is responsible at each stage:
- Seller: export documentation, main carriage, insurance, delivery, risk transfer
- Buyer: import clearance, unloading, onward transport, insurance, risk transfer
Most relevant Incoterms for perishables:
- EXW (Ex Works): Buyer assumes responsibility at the seller’s site.
- FCA (Free Carrier): Seller delivers to a carrier or another party at an agreed location.
- FAS (Free Alongside Ship): Seller delivers goods alongside the vessel at the port of shipment.
- FOB (Free On Board): Seller delivers the goods on board the vessel; buyer assumes risk at port of shipment.
- CFR (Cost and Freight): Seller pays freight to the port of arrival; risk passes once goods are loaded.
- CIF (Cost, Insurance, Freight): Seller pays freight and insurance to the port of arrival; risk passes once goods are loaded.
- CPT (Carriage Paid To): Seller pays carriage to the named destination; risk passes to buyer when goods are handed to the first carrier.
- CIP (Carriage and Insurance Paid To): Seller pays carriage and insurance to the named destination; risk passes to buyer when goods are handed to the first carrier.
- DAT (Delivered At Terminal): Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the destination port or place.
- DAP (Delivered at Place): Seller is responsible for delivery to the named destination, ready for unloading.
- DDP (Delivered Duty Paid): Seller bears all costs and risks, including duties and taxes, to the buyer’s location.
Choosing the Right Incoterm for Your Shipment
Selecting the best Incoterm depends on your cargo, destination, risk appetite, and supply chain needs. For perishables, factors like speed, customs handling, and risk transfer are critical. At CH Logistics, our experts help you:
- Choose the Incoterm that fits your export/import scenario
- Minimize risk of temperature breaches and delays
- Ensure cost transparency and compliance
Tip: For fresh produce and perishables, FCA and CIF are popular choices because they ensure early risk transfer and let exporters control quality up to the port or vessel.
Download your free, printable Incoterms 2020 chart and infographic!
Incoterms 2020 – FAQ
What are Incoterms?
Incoterms are internationally recognized trade terms that define the obligations of buyers and sellers in international logistics, including delivery, risk, and cost allocation.
How do Incoterms affect perishable shipments?
They specify the exact point at which responsibility for temperature, quality, and risk passes from seller to buyer – critical for cold chain integrity.
Are Incoterms legally binding?
They become legally binding when referenced in a sales contract.
What’s new in Incoterms 2020?
Updates include clearer insurance terms, new delivery options (DPU), and improved guidance for containerized shipments.
What if there is a dispute?
Clear use of Incoterms reduces disputes; if one does arise, the contract and Incoterms rules provide the basis for resolution.
Contact CH Logistics for Incoterms Advice
Not sure which Incoterm is right for your perishable shipments?
Contact our experts for a free consultation – we’ll help you with compliance, risk management, and cost optimization for your international exports and imports.
Legal Note
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC).