Understanding Incoterms® 2020: 'C' and 'D' rules

Incoterms® 2020 'C' rules (CFR, CIF, CPT, CIP) signify that the seller pays for main carriage to the destination, but risk transfers to the buyer upon shipment. 'D' rules (DAP, DPU, DDP) are "arrival" terms where the seller bears maximum responsibility, paying costs and covering risks until goods arrive at a destination point.

Incoterms® 2020 'C' Rules: Main Carriage Paid

Under the 'C' group, the seller is responsible for contracting and paying for the carriage of goods to the named destination, but does not assume the risk of loss or damage after the goods are loaded.

• CFR (Cost and Freight - Port of Destination): Seller covers costs to the destination port; risk passes upon loading.

• CIF (Cost, Insurance and Freight - Port of Destination): Same as CFR, but seller must also arrange minimum insurance.

• CPT (Carriage Paid To - Place of Destination): Seller pays for carriage to a named inland destination; risk passes when goods are handed to the first carrier.

• CIP (Carriage and Insurance Paid To - Place of Destination): Same as CPT, but requires maximum (Institute Cargo Clauses A) insurance coverage.

Incoterms® 2020 'D' Rules: Arrival

The 'D' group represents maximum obligation for the seller, who must bear all risks and costs associated with bringing the goods to the destination.

• DAP (Delivered at Place - Destination): Seller delivers the goods to the buyer's disposal on the arriving transport, ready for unloading at the named place.

• DPU (Delivered at Place Unloaded - Destination): Formerly DAT, the seller delivers and unloads the goods at the destination.

• DDP (Delivered Duty Paid - Destination): Seller handles everything, including import customs clearance and duties, to deliver the goods to the destination.

Key Differences in 2020 Update

• DAT to DPU: "Delivered at Terminal" (DAT) was changed to "Delivered at Place Unloaded" (DPU) to clarify that the destination can be any place, not just a terminal.

• Insurance in CIP: CIP now requires a higher level of insurance coverage (Institute Cargo Clauses A) compared to the default minimum in 2010.