ICC Incoterms 2020

What RTC Marketplace shipping needs to know

Incoterms are a set of globally recognized trade terms published by the International Chamber of Commerce (ICC).
They define who is responsible for costs, risk of loss or damage, and who handles export/import formalities at each step of shipping.
They do not cover payment terms, insurance beyond minimums, taxes, or duties. Those are still governed by local laws and the Tariff Schedule you use.

Clarity: Sets clear expectations for buyers and sellers about who pays, what, and when risk transfers.
Compliance: Helps ensure export and import responsibilities are handled correctly, which is crucial for cross-border orders.
Risk management: Helps reduce disputes by codifying responsibilities for packaging, shipping, insurance, and delivery.
Tax and duties: Incoterms work alongside tariffs, duties, and DC sales tax; they do not replace them.

EXW (Ex Works): Seller minimal obligation; buyer bears almost everything from seller’s door.
FCA (Free Carrier): Seller delivers to a carrier named by buyer; risk transfers when handed to the carrier.
CPT (Carriage Paid To): Seller pays for transport to named destination; risk transfers when goods are handed to the first carrier.
CIP (Carriage Insurance Paid To): Like CPT, but seller must insure to a minimum level.
DAP (Delivered At Place): Seller bears costs and risk to named destination; buyer handles import clearance/duties.
DPU (Delivered At Place Unloaded): Seller delivers and unloads at named place; risk passes after unloading.
DDP (Delivered Duty Paid): Seller bears all costs and duties to named destination; risk passes at delivery.
FAS, FOB, CFR, CIF: Ocean-freight terms; used for shipments by sea. Risk transfer timing and who pays freight vary by term (e.g., FOB transfers risk when goods pass the ship’s rail).

For cross-border sales: Choose terms that align with who should manage import duties and who should bear transit risk.
For domestic (US-DC) sales: Incoterms still help define who covers freight and who is responsible for delivery to the customer’s address, but import duties are not a factor.
Insurance: CIP requires the seller to insure; CPT does not require insurance (beyond basic coverage). Decide if you want to insure shipments by default.
Tariffs and taxes: Incoterms do not dictate tariff/duty or local sales tax; those are governed by your Tariff Schedule and DC tax rules. Incoterms coordinate shipping responsibilities, not tax regimes.

Default cross-border setting: Use FCA or CPT for most international shipments.
FCA: Simple and flexible; seller hands goods to buyer’s chosen carrier; buyer arranges import formalities.
CPT: Seller covers transport to destination; risk transfers at carrier handover; consider adding CIP if you want to include insurance.
Higher convenience option for buyers: DDP for international shipments if you’re willing to handle duties and import clearance for a smoother buyer experience (but increases seller obligations and complexity).
Domestic shipments: You can apply DAP or FCA depending on whether you want to control last-mile delivery (DAP) or hand shipment to a chosen carrier at a named place (FCA).
Avoid ambiguity: Always specify the exact incoterm in the order or product listing (e.g., “Incoterms: FCA [city], Buyer’s carrier to be used”).
Align with your Tariff Schedule: Ensure the chosen incoterm works with how you collect tariffs/duties and DC sales tax; update your platform rules when tariff rules change.