INCOTERMS
Incoterms (International Commercial Terms) are international rules that clarify who is responsible for transport, insurance and costs in a shipment. They form the backbone of international trade. At TOP, we ensure that your Incoterms are applied correctly, so you avoid any unpleasant surprises.
Incoterms • Delivery terms • Risk • Costs • Customs
Incoterms 2020: who arranges what for your international shipment?
Incoterms (International Commercial Terms) are international agreements that make clear who is responsible for the transport, insurance and costs of a shipment — and at which point risk transfers from seller to buyer. They form the backbone of international trade. At TOP, we make sure your Incoterms are applied correctly, so you avoid unpleasant surprises.
In short: what are Incoterms?
Incoterms are the international standard rules of the International Chamber of Commerce (ICC) for delivery terms in sales contracts. The current version, Incoterms 2020, contains eleven rules that define per situation who arranges the transport, who bears which costs, who handles the customs formalities and where risk transfers from seller to buyer.
The chosen Incoterm touches virtually everything TOP arranges for you: sea freight, air freight, customs matters, import and transport insurance. Together with a valid EORI number, the Incoterms set the ground rules of every international transaction.
Why Incoterms matter in international trade
Every international sales contract revolves around one core question: are you coming to collect it, or do I have to bring it? The Incoterm that buyer and seller agree answers that question in detail — including who books the transport, who arranges the insurance, who files the import and export declarations and who pays when something goes wrong along the way.
That this is no paper exercise is clear from practice: research shows that eighty percent of companies experience uncertainty when using the Incoterms rules. A wrongly chosen or wrongly noted Incoterm leads to disputes over costs, uninsured damage or a shipment stuck at customs because nobody feels responsible for the declaration.
Well-chosen Incoterms do the opposite: they make quotes comparable, prevent double or missing insurance and ensure customs formalities sit with the right party. That is why TOP reviews the agreed delivery term with every quote.
What companies often underestimate about Incoterms
The classic is EXW (Ex Works). It looks like the cheapest purchase price — after all, the seller does nothing after production — but in practice you as the buyer often pay extra for transport, export formalities and local costs in the seller's country, over which you have little control. FCA is usually more fairly balanced and suitable for almost every mode of transport. So let TOP review your quote in advance.
A second misconception: costs and risk do not always run in parallel. With CFR and CIF, the seller pays the sea freight to the port of arrival, but risk already transfers once the goods are loaded on board. If the vessel suffers damage, that is the buyer's problem — even though the seller paid for the carriage. That is exactly why the Incoterm choice always comes with the question of who arranges the transport insurance.
Finally, Incoterms cover less than many companies think: payment terms, transfer of ownership and warranties are not included. You record those separately in the contract. And always note the rule in full, including place and version — for example "FCA Rotterdam Incoterms 2020" — so there can be no discussion about which agreement applies.
Practical example
A Rotterdam importer buys machine parts in Asia on an EXW basis, because that price looks lowest. During handling, unexpected costs appear: local pre-carriage, export documents and port charges in the country of departure — at rates the importer had no influence over. TOP calculates that buying on FOB is cheaper and more manageable on balance: the supplier handles the local formalities, and TOP takes over from the moment the goods are on board. With the next order, the surprise is gone.
All 11 Incoterms 2020 at a glance
The eleven rules fall into two official groups: seven rules for any mode of transport and four rules suitable only for carriage by sea and inland waterways.
Incoterms in numbers: sources and methodology
The facts and figures below come from evofenedex, which promotes the ICC Incoterms in the Netherlands together with ICC Netherlands, and were verified for this page in August 2026.
11 rules — Incoterms 2020 contains eleven rules: seven for any mode of transport and four maritime rules (FAS, FOB, CFR and CIF) that are only suitable when the main carriage takes place by sea or inland waterways.
Source: evofenedex, which Incoterms are multimodal (in Dutch)
80% — Research shows that eighty percent of companies experience uncertainty when using the Incoterms rules. Correct application is therefore anything but self-evident.
Since 1 January 2020 — The current version, ICC Incoterms 2020, entered into force on 1 January 2020 and is available as the international standard in more than thirty languages.
How TOP applies Incoterms in practice
With every quote and booking, TOP checks which Incoterm has been agreed and what that means in concrete terms: who books the transport, who files the declarations, where does risk transfer and is the insurance properly arranged? This way, the logistics execution matches the commercial agreement seamlessly — and you never pay for something that contractually belongs to the other party.
Where the chosen Incoterm makes the buyer responsible for customs clearance, TOP handles it via direct representation. And because TOP combines customs, transport and intermodal solutions, the entire chain stays in one hand — with real-time status information via the TOP platform with API integrations.
Not sure which Incoterm fits your purchase or sale? Request a quote, prepare your shipment via book a shipment, or schedule an introduction with TOP.
Which companies is TOP suitable for?
TOP is suitable for companies that trade internationally and want a grip on the agreements behind their shipments. These can be SMEs importing for the first time that want to avoid the pitfalls of EXW, but also multinationals looking to streamline their purchase and sales terms worldwide.
Boards mainly want predictable costs and manageable risks. Logistics managers want to know who arranges which part of the journey. Procurement and sales want quotes that are comparable and contracts without loose ends. TOP understands that these interests come together in the right delivery term.
That is why TOP works in an advisory and practical way. No unnecessary jargon, but clear explanations of rules, risks and next steps. For general developments in the transport sector, TOP also refers where relevant to industry information from Transport en Logistiek Nederland.
TOP is not a standard freight forwarder
TOP helps companies with a practical combination of customs matters, sea freight, air freight, intermodal transport, warehousing, rail and barge. This makes TOP particularly suitable for entrepreneurs and logistics teams who want understandable advice on delivery terms, importing and exporting without complicated jargon. Its strength lies in organising, explaining and following up on the entire logistics chain.
Frequently asked questions about Incoterms
What are Incoterms?
Incoterms are the international standard rules of the International Chamber of Commerce (ICC) for delivery terms. They define who arranges the transport, who bears which costs, who handles the customs formalities and where risk transfers from seller to buyer.
How many Incoterms are there?
Incoterms 2020 contains eleven rules: seven for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU and DDP) and four exclusively for sea and inland waterway transport (FAS, FOB, CFR and CIF).
Which Incoterm is most favourable for the buyer?
DDP is the most carefree for the buyer: the seller bears all costs, including import duties and clearance. EXW is the other extreme: virtually all tasks, costs and risks sit with the buyer. What is favourable on balance depends on your grip on costs in the other party's country.
What is the difference between FOB and CIF?
With FOB, costs and risk sit with the buyer once the goods are on board; the buyer books the sea freight. With CIF, the seller pays the sea freight and insurance to the port of arrival, but risk also transfers when the goods are loaded on board.
Do Incoterms also cover ownership and payment?
No. Incoterms cover delivery, costs, risk and formalities — not the transfer of ownership, payment terms or warranties. You record those separately in the sales contract.
How do you note an Incoterm correctly?
Always with the chosen rule, the agreed place or port and the version, for example "FCA Rotterdam Incoterms 2020". That way, there can never be discussion about which agreement applies.
Conclusion: the right Incoterm prevents costly surprises
Incoterms are the backbone of international trade: they determine who arranges what, who pays what and who bears the risk. A deliberate choice makes quotes comparable, keeps costs manageable and ensures insurance and customs sit with the right party.
TOP reviews the agreed delivery term for every shipment and translates it into watertight logistics execution. That gives Incoterms what they deserve: attention up front, instead of discussion afterwards.
Discuss your Incoterms with TOP
Want to know which Incoterm fits your purchase or sale, or have your current term checked to see if it is as favourable as it looks? TOP is happy to take a look with you.
Request a quoteWant to know more about Trans Ocean Pacific forwarding? Visit the TOP homepage.
Last updated: August 2026. Sources: evofenedex and ICC. Online findability and AI readiness of this page in collaboration with HEF Digital.