YANIS GROUP · International Trade Guide

Incoterms® 2020
Explained for Commodity Traders

A practical visual guide to understanding costs, responsibilities, transport, insurance and risk allocation between sellers and buyers in international commodity transactions.

Why Incoterms matter in international trade
Incoterms® define key responsibilities between the seller and the buyer in a sales contract: delivery, transportation, export and import formalities, allocation of costs and the point at which risk transfers. They do not, by themselves, determine ownership/title, payment terms, price, applicable law or the complete terms of the sales contract.

The 5 things every trader should check

Before accepting an Incoterm in an international commodity deal, identify exactly where responsibility changes hands.

🚢 Transport Who arranges and pays for transportation?

⚠️ Risk Where does the risk transfer?

🛡️ Insurance Who is responsible for arranging insurance?

📑 Customs Who handles export and import formalities?

The 11 Incoterms® 2020 Rules

The rules are divided into two major categories according to the type of transport they can be used with.

Any Mode of Transport

7 Rules

EXW · FCA · CPT · CIP · DAP · DPU · DDP

Sea & Inland Waterway

4 Rules

FAS · FOB · CFR · CIF

Commodity Trading Focus

FOB · CFR · CIF

Frequently encountered in bulk commodity and maritime international trade.

Incoterms® Comparison Table

The simplified matrix below gives traders a fast overview. Always verify the precise contractual requirements for the transaction.

Rule	Transport	Seller’s Main Responsibility	Buyer Takes Risk	Seller Insurance	Export	Import
EXW Ex Works	Any Mode	Goods made available at seller’s premises	At seller’s premises	No obligation	Buyer	Buyer
FCA Free Carrier	Any Mode	Delivery to the agreed carrier/place	At delivery to carrier	Seller	Buyer
CPT Carriage Paid To	Any Mode	Seller pays carriage to named destination	When goods are handed to carrier	Buyer	Buyer
CIP Carriage & Insurance Paid To	Any Mode	Carriage + required insurance to destination	When goods are handed to carrier	Seller	Buyer
DAP Delivered at Place	Any Mode	Goods delivered ready for unloading	At named destination	Seller	Buyer
DPU Delivered at Place Unloaded	Any Mode	Goods delivered and unloaded	After unloading at destination	Seller	Buyer
DDP Delivered Duty Paid	Any Mode	Maximum seller responsibility to destination	At named destination	Seller	Seller
FAS Free Alongside Ship	Sea / Inland	Goods placed alongside vessel	Alongside vessel	Seller	Buyer
FOB Free On Board	Sea / Inland	Goods loaded on board vessel	Once on board	Seller	Buyer
CFR Cost & Freight	Sea / Inland	Seller pays freight to destination port	Once on board	Seller	Buyer
CIF Cost, Insurance & Freight	Sea / Inland	Freight + required insurance to destination port	Once on board	Seller	Buyer

Seller vs Buyer Responsibilities

🟨 Seller

Prepare and package the goods
Provide agreed commercial documents
Handle export formalities where required
Arrange transport where required by the rule
Bear costs allocated to the seller
Manage risk until the contractual transfer point

🟦 Buyer

Pay the agreed purchase price
Arrange transport where required
Handle import formalities where applicable
Pay duties and taxes where applicable
Bear costs allocated to the buyer
Assume risk after the contractual transfer point

Incoterms® in Commodity Trading

For commodity traders, selecting an Incoterm is not simply a logistics decision. It directly affects the commercial structure of the transaction, freight exposure, pricing and operational responsibilities.

🚢 FOB — Seller controls the export side Commonly used when the buyer wants to control the main ocean freight and nominate the vessel.

🌊 CFR — Freight included, insurance separate The seller contracts the main carriage, while the buyer assumes risk once the goods are on board.

🛡️ CIF — Freight + insurance The seller contracts carriage and provides the insurance required under the Incoterms® rule.

📦 DAP — Delivered to destination The seller carries the transportation responsibility to the named destination, while import clearance remains with the buyer.

⚠️ Important: Cost transfer is not always risk transfer.

This is one of the most important concepts for international traders. Under the “C” rules — CPT, CIP, CFR and CIF — the seller may pay the main carriage to the named destination, while the risk transfers earlier according to the specific rule.

Therefore, a trader should never assume that the party paying the freight is automatically the party carrying the transport risk until destination.

Insurance: Don’t confuse CIF and CIP

Insurance obligations differ depending on the Incoterms® rule.

🛡️ CIF

The seller must obtain cargo insurance in accordance with the CIF insurance requirement. CIF is intended for sea and inland waterway transport.

🛡️ CIP

The seller must obtain cargo insurance in accordance with the CIP insurance requirement. CIP can be used for any mode of transport.

Trader’s Incoterms® Checklist

Before signing an SPA, Sales Contract or Purchase Contract:

✓ Specify the exact Incoterm® rule.
✓ Specify the named place or port precisely.
✓ Confirm which party books the vessel or transport.
✓ Confirm who pays freight and related charges.
✓ Confirm the exact point of risk transfer.
✓ Confirm insurance obligations.
✓ Confirm export and import responsibilities.
✓ Define documentation requirements separately in the contract.
✓ Ensure the Incoterm is consistent with the payment and delivery structure.

YANIS GROUP

International Commodity Trading

In international commodity transactions, every commercial term matters. Incoterms® provide a standardized framework for allocating delivery responsibilities, costs and risk — helping buyers and sellers structure transactions with greater clarity.

YANIS GROUP operates across international markets with a focus on commodity trading, cross-border transactions, logistics coordination and structured international trade.

Reference: Incoterms® 2020, International Chamber of Commerce (ICC). Incoterms® is a registered trademark of the International Chamber of Commerce.

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Incoterms® 2020

Incoterms® 2020 Explained for Commodity Traders