Which Incoterm Should You Choose for Import and Export?
Article Summary (Quick Read)
Incoterms® 2020 are 11 standardized rules published by the International Chamber of Commerce (ICC) since 1936. Inserted into a sales contract (e.g., "CIF Casablanca Incoterms® 2020"), they define — between the seller and the buyer — who organizes and pays each stage of transport, where the goods are delivered, where the risk transfers, who clears export and import customs, and who must arrange insurance. They do not govern transfer of ownership or payment terms, which remain matters for the contract and applicable law.
The 11 rules split into two families: 7 rules for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP) and 4 rules reserved for sea and inland waterway transport (FAS, FOB, CFR, CIF). They also range from minimum seller obligation (Group E) to maximum (Group D):
| Incoterm | In one sentence |
|---|---|
| EXW | Seller makes goods available at its premises; buyer does everything else. |
| FCA | Seller hands goods to the buyer's carrier at an agreed origin place, export cleared. The right rule for containers. |
| FAS | Seller delivers alongside the vessel at the origin port (sea bulk only). |
| FOB | Seller delivers loaded on board at the origin port (sea bulk only). |
| CPT | Seller pays carriage to destination; risk transfers at the first carrier at origin. |
| CIP | CPT + seller must insure (extended cover, ICC Clauses A). |
| CFR | Seller pays sea freight to destination port; risk transfers on board at origin. |
| CIF | CFR + seller must insure (minimum cover, ICC Clauses C). |
| DAP | Seller bears cost and risk to the destination place, ready for unloading; buyer clears import. |
| DPU | DAP + seller must unload — the only rule with seller unloading. |
| DDP | Seller does everything, including import customs, duties, and taxes. |
Three mistakes cause most disputes: using FOB/CFR/CIF for containerized cargo (use FCA/CPT/CIP instead); assuming that under C rules the seller's risk runs as far as its costs (it doesn't — risk transfers at origin); and promising DDP without being able to legally act as importer in the destination country.
Want to know the right Incoterm for your operation? Try the Hitek Incoterm Generator: describe where costs and risk change hands, who clears customs, and who insures — and it identifies the matching rule, or the closest one if your setup doesn't exist. ⚠️ The result is an indication only — the final choice depends on your commercial contract; validate it with your freight forwarder and, when needed, a legal or customs advisor.
Need a quote or help? Hitek Logistic Morocco — hitek.ma/contact.
Introduction: Why Incoterms Matter for Every Import and Export Operation
Before any international shipment, one question must be answered: at what point are the risks and the costs transferred to the buyer? When it isn't answered before the goods move, the consequences are predictable: unexpected charges, blocked containers, demurrage, insurance gaps, and disputes between seller and buyer over who should have done what.
In 1936, the International Chamber of Commerce (ICC) published the first answer to that question under the name Incoterms® 1936 (INternational COmmercial TERMS) — a series of international rules designed to remove the uncertainty caused by commercial practices and interpretations that differ from one country to another. The rules have been amended several times to follow modern trade practice, leading to Incoterms® 2020, which succeeded Incoterms® 2010 and is the current reference version in contracts worldwide.
For Moroccan companies — exporting automotive components from Tangier, importing raw materials through Casablanca, trucking goods to Europe — mastering Incoterms is not legal decoration. It directly affects margins, cash flow, insurance strategy, and customer relationships. As a freight forwarder in Morocco, Hitek Logistic Morocco works with these rules every day and helps importers and exporters translate three letters on an invoice into a clear operational plan.
Key takeaway: Although optional, Incoterms are standardized and universally recognized clauses. By referring to one of them, buyer and seller clearly allocate obligations, risks, and costs — and dramatically reduce the room for dispute.
What Is an Incoterm?
An Incoterm is a three-letter rule (original English codification, e.g., FOB) that the parties insert into their sales contract, followed by a precise location and the version reference — for example, "FOB Le Havre Incoterms® 2020" or "FCA Tanger Med Incoterms® 2020".
What Incoterms Clarify in a Sales Contract
Concretely, in an international sales contract, the Incoterm clarifies five families of questions:
- The critical point of risk transfer from seller to buyer along the transport process (risk of loss, damage, or theft of the goods) — allowing the party bearing the risk to take appropriate measures, notably insurance.
- Who — seller or buyer — must conclude the contract of carriage (book the truck, vessel, or aircraft).
- How logistics and administrative costs are split between the two parties at each stage of the journey.
- Who takes care of packing, marking, handling, loading and unloading operations, container stuffing and stripping, and inspection operations.
- The respective obligations for export and import formalities, payment of import duties and taxes, and provision of the required documents.
What Incoterms Do NOT Define
This is where many disputes are born. Incoterms deliberately separate the question of risk transfer from the question of ownership transfer — the latter remains governed by the law applicable to the contract. Incoterms also do not cover: payment terms and methods, contractual penalties, product compliance and certifications, regulatory obligations unrelated to transport, or the rest of the commercial contract's content.
Frequent mistake: Believing that "CIF" means the seller owns the goods until the destination port. Wrong. Under CIF, risk transfers to the buyer when the goods are loaded on board at the port of origin — and ownership follows the contract and applicable law, never the Incoterm.
One more essential point: Incoterms legally bind the seller and the buyer. A freight forwarder such as Hitek Logistic Morocco acts as a logistics provider appointed by one of the parties — it executes transport, customs clearance, and documentation, but it is not a contractual party to the Incoterm.
Find Your Incoterm in One Minute: The Hitek Incoterm Generator
Reading definitions is one thing — matching them to your shipment is another. The Hitek Incoterm Generator tells you which Incoterm to use based on how your operation is actually organized. You describe the shipment — up to which point the seller pays, where the risk transfers (they often differ!), the mode of transport, who clears export and import customs, who unloads, and whether the seller covers insurance — and the tool:
- identifies the matching Incoterms® 2020 rule with your named origin/destination,
- confirms whether your cost transfer and risk transfer points are correct,
- displays the seller/buyer split for costs, risk, and insurance on the logistics chain,
- and if your combination matches no standard rule, tells you so and shows the closest Incoterm with the settings to change.
👉 Try the Incoterm Generator now: Describe where costs and risk change hands, who clears customs, and who insures — and it identifies the matching rule, or the closest one if your setup doesn't exist.
⚠️ Important: The generator's result is an indication, not a contractual decision. The right Incoterm also depends on your commercial contract, the countries involved, customs constraints, and each party's real ability to handle the required formalities. Always validate the final choice with your contract, your freight forwarder, and — when needed — a legal or customs advisor. Need a quote or help? Fill out the form at hitek.ma/contact.
What Changed in Incoterms® 2020 (vs 2010)
The 2020 revision introduced four main changes worth knowing:
- FCA and on-board bills of lading. Delivery under FCA happens before the goods are loaded on a vessel, so the seller could struggle to obtain the on-board bill of lading often required by letters of credit. Incoterms 2020 added an option: buyer and seller can agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller after loading.
- DPU replaced DAT (Delivered At Terminal), to emphasize that the destination doesn't have to be a "terminal" — it can be any agreed place, provided the seller can actually unload there.
- Differentiated insurance levels between CIF and CIP. CIP now requires extended "all risks" cover (Institute Cargo Clauses A); CIF keeps minimum cover (Institute Cargo Clauses C). Parties remain free to agree a different level.
- Transport with own means. FCA, DAP, DPU, and DDP explicitly allow transport to be performed with the seller's or buyer's own vehicles, without a third-party carrier.
How to Use Incoterms® 2020 Correctly
State the rule in the sales contract. Always write: the chosen rule + the port/place + "Incoterms® 2020". Example: CIF Hong Kong Incoterms® 2020. Only the standardized three-letter abbreviations should be used — no exotic or home-made codes.
Choose the rule as part of the commercial negotiation. The right Incoterm depends on the company's organizational capabilities, the mode of transport, the level of service you want to give your client or receive from your supplier, market habits, and competitive practice. It must suit both the goods and the transport mode.
Specify the place or port with maximum precision. "FCA Le Havre" is not enough if the exporter is based in Le Havre: is it FCA the factory, FCA the forwarder's groupage warehouse, or FCA quay No. X of the port? Write it out — e.g., "FCA Hitek warehouse, Zone Franche Tanger, Morocco, Incoterms® 2020".
Watch out for C rules. Under CPT, CIP, CFR, and CIF, the named place is not the place of delivery: it is the destination up to which transport is paid. Risk transfers at origin. It is strongly recommended to specify both places in the contract: the delivery place where risk passes, and the destination up to which the seller pays carriage.
Beware of local variants. The "American FOBs" are a classic trap: in US domestic practice, FOB does not refer to a vessel or port at all (FOB/Point of departure, FOB/Border, FOB/Point of sale, FOB/Destination cleared…). In international contracts, stick strictly to the ICC definitions.
Departure Sale vs Arrival Sale: A Fundamental Distinction
Departure sale (vente au départ): the goods travel at the buyer's risk — either from the moment they are made available at the seller's premises (EXW), or from the moment they are handed to the carrier for shipment (FCA, FAS, FOB, CFR, CIF, CPT, CIP). Eight of the eleven rules are departure sales: the buyer carries, to a greater or lesser extent, the charges and risks of the journey.
Arrival sale (vente à l'arrivée): the goods travel at the seller's risk up to the agreed point: to the destination place ready for unloading (DAP), or to the destination point including unloading (DPU), or including import clearance (DDP).
Key takeaway: This single distinction explains most of the logic of Incoterms. If you remember only one structure, remember this one: under E, F, and C rules the buyer bears the transport risk; under D rules the seller does.
Classification of the 11 Incoterms 2020
By Mode of Transport
Rules for ANY mode of transport (multimodal, road, air, sea, courier):
| Code | English name | French name |
|---|---|---|
| EXW | Ex Works | À l'usine |
| FCA* | Free Carrier | Franco Transporteur |
| CPT | Carriage Paid To | Port payé jusqu'à |
| CIP* | Carriage and Insurance Paid To | Port payé, assurance comprise, jusqu'à |
| DAP | Delivered At Place | Rendu au lieu de destination convenu |
| DPU* | Delivered at Place Unloaded | Déchargé au lieu de destination convenu |
| DDP | Delivered Duty Paid | Rendu droits acquittés |
Rules reserved for SEA and INLAND WATERWAY transport:
| Code | English name | French name |
|---|---|---|
| FAS | Free Alongside Ship | Franco le long du navire |
| FOB | Free On Board | Franco à bord |
| CFR | Cost and Freight | Coût et Fret |
| CIF* | Cost, Insurance and Freight | Coût, Assurance et Fret |
* Incoterms® 2020 novelties: FCA (optional on-board bill of lading), CIP (ICC Clauses A "all risks" insurance), DPU (new rule replacing DAT), CIF (ICC Clauses C "minimum" insurance).
By Level of Seller Obligation
| Group | Rules | Logic |
|---|---|---|
| E | EXW | Minimum seller obligation: goods made available at origin |
| F | FCA, FAS, FOB | Main transport not paid by the seller |
| C | CPT, CIP, CFR, CIF | Main transport paid by the seller, but risk transfers earlier, at origin |
| D | DAP, DPU, DDP | Maximum seller obligation: cost and risk to the destination |
Who Bears Which Costs and Risks? The Complete Allocation Matrix
The two tables below show, stage by stage, who pays (costs) and who bears the risks under each Incoterm. S = Seller, B = Buyer.
Allocation of COSTS
| Stage | EXW | FCA | CPT | CIP | DAP | DPU | DDP | FAS | FOB | CFR | CIF |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Packaging | S | S | S | S | S | S | S | S | S | S | S |
| Loading at factory | B | S | S | S | S | S | S | S | S | S | S |
| Pre-carriage (origin) | B | S¹ | S | S | S | S | S | S | S | S | S |
| Export customs | B | S | S | S | S | S | S | S | S | S | S |
| Handling at departure (loading main transport) | B | B | S | S | S | S | S | B | S | S | S |
| Main international transport | B | B | S | S | S | S | S | B | B | S | S |
| Transport insurance | B | B | B | S² | S | S³ | S | B | B | B | S⁴ |
| Handling on arrival (unloading main transport) | B | B | B | B | S | S | S | B | B | B | B |
| Import customs (duties & taxes) | B | B | B | B | B | B | S | B | B | B | B |
| On-carriage (destination) | B | B | B | B | S | B | S | B | B | B | B |
| Unloading at final premises | B | B | B | B | B | S⁵ | B | B | B | B | B |
Allocation of RISKS
| Stage | EXW | FCA | CPT | CIP | DAP | DPU | DDP | FAS | FOB | CFR | CIF |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Packaging | S | S | S | S | S | S | S | S | S | S | S |
| Loading at factory | B | S | S | S | S | S | S | S | S | S | S |
| Pre-carriage (origin) | B | S¹ | S | S | S | S | S | S | S | S | S |
| Export customs | B | S | S | S | S | S | S | S | S | S | S |
| Handling at departure | B | B | B | B | S | S | S | B | S | S | S |
| Main international transport | B | B | B | B | S | S | S | B | B | B | B |
| Handling on arrival | B | B | B | B | B | S | S | B | B | B | B |
| Import customs | B | B | B | B | B | B | S | B | B | B | B |
| On-carriage (destination) | B | B | B | B | B | B | S | B | B | B | B |
| Unloading at final premises | B | B | B | B | B | B | B | B | B | B | B |
¹ Depending on the agreed handover place. ² CIP: mandatory extended cover (ICC Clauses A), for the buyer's benefit. ³ DPU: insurance not mandatory. ⁴ CIF: mandatory minimum cover (ICC Clauses C), for the buyer's benefit. ⁵ DPU is the only rule where the seller unloads at destination.
Key takeaway — read the C columns carefully: under CPT, CIP, CFR, and CIF, the seller pays the main transport (cost = S) while the buyer bears the transport risk (risk = B). Cost transfer and risk transfer happen at different places. This is the single most misunderstood feature of Incoterms.
The 11 Incoterms 2020, One by One — In Full Detail
Group E: Minimum Seller Obligation
EXW — Ex Works / À l'usine (all modes)
Seller's obligations. The seller's only responsibility is to place the goods, in packaging suitable for transport, at the buyer's disposal at its premises (the price generally includes palletization). The seller must also, at the buyer's request and at the buyer's cost and risk, provide any assistance needed to obtain an export licence or insurance, and give all useful information for exporting safely.
Buyer's obligations. The buyer bears all costs and risks inherent to the transport, from the factory gate to the destination — loading included, export customs included. EXW represents the minimum obligation for the seller.
Variant — "EXW Loaded". Introduced by the 2000 revision to recognize a widespread practice: the seller loads the goods on the buyer's vehicle, at the seller's cost and risk. This must be spelled out in the contract (e.g., "EXW Casablanca loaded, Incoterms® 2020").
Morocco example. A Casablanca textile producer sells EXW: it palletizes the goods at its Aïn Sebaâ warehouse; the French buyer's forwarder collects, loads, clears export, and ships.
Key point / frequent mistake. The buyer must handle export clearance in a foreign country — often impractical, and the seller loses easy proof of export (relevant for VAT). For most international sales, FCA is the safer alternative.
Group F: Main Transport Not Paid by Seller
FCA — Free Carrier / Franco Transporteur (all modes — the container rule)
Seller's obligations. Two configurations: (a) delivery at the seller's premises — the seller loads the properly packed goods on the vehicle provided by the buyer (specify "FCA seller's premises"); (b) delivery at another agreed place (carrier's terminal, forwarder's warehouse) — the seller carries the goods to that place but is not responsible for unloading its vehicle. In both cases, export clearance is the seller's job.
Buyer's obligations. The buyer chooses the mode of transport and the carrier, concludes the contract of carriage, and pays the main freight. Costs and risks transfer when the carrier takes charge of the goods.
Geographic precision. More than any other rule, FCA demands a precise named place: "FCA (Le Havre)" is insufficient — is it the factory, forwarder X's groupage warehouse, or quay No. X of the port? Name it exactly.
On-board bill of lading (2020 novelty). Since FCA delivery occurs before loading on board, the seller may struggle to obtain an on-board B/L for a letter of credit. Incoterms 2020 lets the parties agree that the buyer instructs its carrier to issue the on-board B/L to the seller after loading, typically routed via the banks.
Own means. Incoterms 2020 explicitly allows the transport to be organized with the buyer's own vehicles, without a third-party carrier.
Morocco example. A Tangier automotive supplier delivers FCA to the buyer's carrier at a Tanger Med terminal, export cleared; the buyer's forwarder controls the sea freight.
Key point. Prefer FCA to FOB whenever the cargo travels in containers or by ro-ro vessel.
FAS — Free Alongside Ship / Franco le long du navire (sea & inland waterway only)
Seller's obligations. Fulfilled when the goods, export cleared, are placed alongside the vessel — on the quay or in lighters/barges — at the agreed loading port. Obtaining an export licence is at the seller's cost and risk.
Buyer's obligations. From that moment, the buyer bears all costs and risks of loss or damage — including in case of vessel delay or cancelled port call. The buyer nominates the carrier, concludes the transport contract, pays the freight, and must give the seller the vessel name, loading place, and chosen delivery moment within the agreed period.
A place-and-moment obligation. The seller only delivers FAS if the goods are alongside when the vessel is at berth: delivering more than a week before the buyer's chosen vessel is premature.
Morocco example. Bulk minerals placed alongside the vessel at the port of Casablanca; the buyer's shipping line loads.
Key point. Unsuitable for containers (they are handed to terminals, not alongside vessels) — use FCA.
FOB — Free On Board / Franco à bord (sea & inland waterway only)
Seller's obligations. Deliver the goods on board the vessel chosen by the buyer at the named loading port, and complete export customs formalities. Delivery is fulfilled when the goods are on board (or, in string sales, when the seller procures goods already so delivered).
Buyer's obligations. The buyer chooses the vessel, pays the sea freight and insurance, handles arrival formalities, and bears all costs and risks of loss or damage from the moment of delivery on board.
Variants. "Mise à FOB" is forwarder jargon for the pre-loading operations (including export clearance) paid by the seller. "FOB Stowed" / "FOB Stowed and Trimmed": the seller also pays for stowing (and trimming) — but then specify in the contract where exactly the risk transfers. And beware the American FOBs, which have nothing to do with the ICC rule.
Morocco example. A Moroccan exporter delivers goods on board at Tanger Med; once over the rail and set down inside the ship, cost and risk are the buyer's.
Key point. One of the most misused rules worldwide — routinely applied to containers delivered to terminals days before loading, creating a risk grey zone. Containers → FCA.
Group C: Main Transport Paid by Seller, Risk at Origin
CPT — Carriage Paid To / Port payé jusqu'à (all modes)
Seller's obligations. The seller controls the logistics chain: it handles export clearance, chooses the carriers, and pays the costs to the agreed destination place.
Buyer's obligations. Risks of damage or loss are borne by the buyer from the moment the goods are handed to the first carrier. The buyer then handles import clearance and unloading costs.
Unloading costs — clarify them. The buyer normally bears unloading at destination unless these costs are included in the freight contract. Clarify this with the buyer, or the carrier may turn to the seller (its principal) to claim unpaid unloading and vehicle-immobilization charges.
Two distinct places. Under CPT, risk and cost transfer at different places. Specify both in the contract: the delivery place where risk passes to the buyer, and the destination up to which the seller contracts carriage.
Morocco example. CPT Lyon: the Moroccan seller pays multimodal freight to Lyon, but the risk passed to the French buyer when the goods left Casablanca with the first carrier.
Key point. Cost to destination, risk from origin. The buyer should insure the transit.
CIP — Carriage and Insurance Paid To / Port payé, assurance comprise (all modes)
Seller's obligations. Identical to CPT, plus transport insurance: the seller concludes the carriage contract, pays the freight and the insurance premium. Under Incoterms 2020, the seller must obtain extended "all risks" cover — Institute Cargo Clauses A (or similar), for the buyer's benefit. The parties may agree a lower level.
Buyer's obligations. Risk transfers at the first carrier, as in CPT; the buyer then handles import clearance and unloading. If the buyer wants even wider protection, it must either obtain the seller's agreement or take out complementary insurance itself.
Morocco example. Same Lyon flow as CPT, with the seller additionally providing ICC(A) insurance to Lyon.
Key point. Since 2020, CIP insurance (ICC A) is stronger than CIF insurance (ICC C) — a deliberate differentiation. For containerized or high-value multimodal cargo, CIP is the natural insured option.
CFR — Cost and Freight / Coût et Fret (sea & inland waterway only)
Seller's obligations. The seller chooses the carrier, concludes the transport contract, and pays the freight to the agreed destination port, unloading excluded. Loading the export-cleared goods on the vessel and shipment formalities are its responsibility. It must provide, at its own cost, the usual transport document to the destination port (enabling the buyer to claim the goods from the carrier or sell them in transit).
Buyer's obligations. The buyer bears the transport risk from the moment the goods are delivered on board at the loading port, receives them from the carrier, and takes delivery at the destination port.
Morocco example. CFR Le Havre: the Moroccan seller pays the ocean freight from Casablanca; a container lost mid-voyage is the buyer's risk.
Key point. Same structure as FOB for risk, plus seller-paid freight. No insurance obligation — the buyer should insure the voyage.
CIF — Cost, Insurance and Freight / Coût, Assurance et Fret (sea & inland waterway only)
Seller's obligations. Identical to CFR, plus the obligation to provide marine insurance against loss or damage. The seller pays the premium. Under Incoterms 2020, required cover is limited — Institute Cargo Clauses C (or similar); the parties are free to agree higher cover.
Buyer's obligations. Bears the transport risk from delivery on board at the loading port; takes delivery from the carrier at the destination port. Buyers appreciate CIF because it frees them from logistics formalities — but they should check whether ICC(C) cover is enough for their cargo.
Morocco example. An Asian supplier sells CIF Casablanca: it pays freight and insurance to the port of Casablanca, but the Moroccan importer bears the voyage risk and handles Moroccan import clearance and duties.
Key point. Minimum insurance only; risk at origin despite destination-paid freight; not ideal for containers.
Group D: Maximum Seller Obligation
DAP — Delivered At Place / Rendu au lieu de destination (all modes)
Seller's obligations. Deliver the goods by placing them at the buyer's disposal on the arriving means of transport, ready for unloading, at the agreed destination place. Export clearance is the seller's; import clearance is not. No insurance obligation towards the buyer, but the seller must provide, at its own cost, the document enabling the buyer to take delivery. Transport may be under a carriage contract or with the seller's own means.
Buyer's obligations. Pay the price per the sales contract, take delivery once delivered, handle unloading, import clearance, duties, and taxes, and inform the seller of any security information needed.
Heritage note. DAP (with DPU) replaced the old DDU. It is advisable to use it in countries where destination transport is reliable and controllable.
Morocco example. A Moroccan exporter delivers furniture DAP Madrid: the truck arrives at the buyer's warehouse ready for unloading; the buyer unloads and had cleared EU import.
Key point. If import clearance stalls, storage and demurrage at destination are the buyer's problem — but the delay hurts both parties. Agree the destination-side task split in writing.
DPU — Delivered at Place Unloaded / Livré au lieu déchargé (all modes)
Why it exists. DPU replaced DAT (Delivered At Terminal) to make clear that the destination need not be a terminal — any agreed place works, provided the seller can actually unload there.
Seller's obligations. Deliver by placing the goods at the buyer's disposal at the agreed destination, on the agreed date or within the agreed period, after unloading them from the arriving means of transport. The seller contracts and pays the carriage, clears export (not import), and provides the delivery document. Insurance is not mandatory.
Buyer's obligations. Take delivery once delivered, pay the price, handle import clearance, duties, taxes, and on-carriage if any; provide security information to the seller on request.
Use cases. Created with containerized transport in mind; also suits conventional maritime transport when the seller wants to keep the risk of unloading the vessel at the destination port — in that case specify the exact disposal point (quay, under hook…).
Morocco example. A European seller delivers and unloads industrial equipment at a Casablanca warehouse; the Moroccan buyer clears import.
Key point. The only Incoterm where the seller must unload at destination. If the seller can't guarantee unloading capability, use DAP.
DDP — Delivered Duty Paid / Rendu droits acquittés (all modes)
Seller's obligations. The maximum obligation: costs and risks transfer at delivery to the buyer's premises, and import clearance — duties and taxes included — is the seller's responsibility. Transport may be contracted or performed with own means.
Buyer's obligations. Take delivery at the agreed destination and pay the unloading costs; provide the seller with any security information needed for export, import, and transport.
DDP versus EXW. DDP is the exact mirror image of EXW: one rule concentrates everything on the buyer, the other everything on the seller.
Variant — excluding certain import charges. If the parties want to exclude some import-related costs (typically VAT) from the seller's obligations, say so expressly: "DDP, VAT unpaid".
Morocco example. A foreign supplier delivers spare parts DDP to a plant near Casablanca, paying Moroccan duties and VAT and delivering ready for unloading.
Key point. DDP requires the seller to be able to legally act as importer in the destination country (fiscal representation, customs registration). Many DDP promises collapse at customs — validate feasibility with a local freight forwarder before signing.
Comparison Table: Incoterms 2020 at a Glance
| Incoterm | Mode | Main transport paid by | Risk transfers | Export customs | Import customs & duties | Insurance mandatory? | Group |
|---|---|---|---|---|---|---|---|
| EXW | All | Buyer | Goods available at seller's premises (not loaded) | Buyer | Buyer | No | E |
| FCA | All | Buyer | Handover to buyer's carrier at named place | Seller | Buyer | No | F |
| FAS | Sea | Buyer | Alongside vessel, origin port | Seller | Buyer | No | F |
| FOB | Sea | Buyer | On board vessel, origin port | Seller | Buyer | No | F |
| CPT | All | Seller | At first carrier, origin | Seller | Buyer | No | C |
| CIP | All | Seller | At first carrier, origin | Seller | Buyer | Yes — seller, ICC (A) extended | C |
| CFR | Sea | Seller | On board vessel, origin port | Seller | Buyer | No | C |
| CIF | Sea | Seller | On board vessel, origin port | Seller | Buyer | Yes — seller, ICC (C) minimum | C |
| DAP | All | Seller | At destination, before unloading | Seller | Buyer | No | D |
| DPU | All | Seller | At destination, after unloading | Seller | Buyer | No | D |
| DDP | All | Seller | At destination, before unloading | Seller | Seller (duties & taxes incl.) | No | D |
How to Choose the Right Incoterm
There is no universally "best" Incoterm — only the rule best suited to your operation. Work through these questions:
- Who has better control over international transport, and better freight rates? The party with the stronger logistics organization — often through its freight forwarder in Morocco — should manage the main leg.
- Who knows the destination country's import regulations best? Import clearance should almost always stay with the party established there.
- Who wants to control the shipment (carrier choice, transit time, visibility) — and who wants to limit risk exposure?
- Is the cargo containerized/multimodal (→ FCA, CPT, CIP, DAP, DPU, DDP) or bulk/conventional sea freight (→ FAS, FOB, CFR, CIF)?
- Can the seller legally pay duties and taxes in the destination country? If not, DDP is off the table; DAP or DPU are realistic alternatives.
- Is transport insurance necessary for this cargo? Remember only CIP (ICC A) and CIF (ICC C) oblige the seller to insure — under every other rule, insure the leg where you carry the risk.
- What does the current trade context favor? The market trend is to relieve the buyer of logistics concerns, which valorizes the exporter's position (C and D rules as a service argument) — but negotiate carefully on a first shipment, and consider a documentary credit for higher-risk countries.
Hitek advice: Moroccan importers who buy on FCA or FOB terms and manage their own sea or air freight usually get better cost control and visibility than those accepting the supplier's CIF price. Moroccan customs value is generally assessed on a CIF basis in any case — so know your freight and insurance figures whatever the rule.
Which Law Governs the Contract?
The Incoterm allocates logistics obligations — but the sales contract still needs a governing law. Three options exist: the exporter's law (the seller's preference, since it knows it best — though some laws, like French or Belgian law, strongly protect the buyer); the importer's law (sometimes less restrictive for the exporter, but dangerous if you don't master it); or the law of a third country, which neutralizes legal nationalism — Swiss law is often recommended as exporter-friendly and neutral. Seek advice from an international law firm for significant contracts.
FAQ — Incoterms 2020
1. Which Incoterm is most advantageous for the buyer? No absolute answer. DDP is the most comfortable (the seller does everything), but the buyer loses control over transport and often pays a hidden logistics margin. Experienced importers frequently prefer FCA or FOB, buying their own freight through their forwarder to control costs and transit times.
2. Which Incoterm is most advantageous for the seller? EXW involves the least obligation, but it complicates export formalities for the buyer and can deprive the seller of clean proof of export. FCA is usually the smarter low-obligation choice. Sellers who master logistics can use CPT/CIP or DAP as a commercial advantage — in line with the market trend of relieving buyers of logistics concerns.
3. What is the difference between DAP and DDP? Under both, the seller delivers to the agreed destination. Under DAP the buyer handles import clearance, duties, and taxes; under DDP the seller does. DDP is the only rule where the seller clears import customs.
4. What is the difference between FOB and FCA? FOB is maritime-only: delivery and risk transfer on board at the origin port. FCA works for all modes: delivery at a named place, usually a terminal, with risk at handover to the buyer's carrier. For containers and ro-ro, FCA is the correct rule.
5. What is the difference between CIF and CIP? Both include seller-paid insurance for the buyer's benefit. CIF (sea only) requires minimum cover — Institute Cargo Clauses C. CIP (all modes) requires extended "all risks" cover — Institute Cargo Clauses A. This differentiation is a novelty of Incoterms 2020.
6. Do Incoterms determine transfer of ownership? No. Incoterms deliberately separate risk transfer from ownership transfer. Ownership is governed by the sales contract and the applicable law — never by the Incoterm.
7. Which Incoterm should be used for an import into Morocco? Often FOB or FCA, managing your own freight through your freight forwarder in Morocco for better control. Note that Moroccan customs value is generally assessed on a CIF basis, so you must know your freight and insurance costs for the customs declaration regardless of the rule.
8. Which Incoterm should be used for a containerized shipment? FCA, CPT, CIP, DAP, DPU, or DDP. Avoid FOB/CFR/CIF for containers: the goods are handed over at a terminal before loading, creating a gap between physical handover and contractual risk transfer.
9. Does the freight forwarder choose the Incoterm? No. The Incoterm is agreed between the seller and the buyer in the sales contract. The forwarder — such as Hitek Logistic Morocco — advises on the most suitable rule and executes the resulting logistics obligations, but it is not a party to the Incoterm.
10. Can the responsibilities of an Incoterm be modified in a contract? Yes — the contract prevails, and recognized variants exist: "EXW Loaded", "FOB Stowed", "DDP VAT unpaid", FCA with on-board bill of lading. But write modifications precisely (including where risk transfers under the variant), or they create more ambiguity than they remove.
11. What changed in Incoterms 2020 compared to 2010? Four main points: DPU replaced DAT; CIP and CIF now carry different mandatory insurance levels (ICC A vs ICC C); FCA gained the optional on-board bill of lading mechanism; and FCA, DAP, DPU, DDP explicitly allow transport with the seller's or buyer's own means.
12. Is it mandatory to write "Incoterms® 2020" in the contract? Strongly recommended. Incoterms are a standard: use only the normalized three-letter abbreviations, followed by the precise named place or port and the version — e.g., "CIF Hong Kong Incoterms® 2020". Without the version, a court may have to guess which edition the parties meant.
Conclusion
Choosing the right Incoterm — and writing it correctly, with a precise named place and the "Incoterms® 2020" reference — reduces risks, unexpected costs, and disputes, and makes every player in the chain more efficient: seller, buyer, carrier, insurer, customs, and freight forwarder. Whether you ship by sea freight from Tanger Med, air freight from Casablanca, or road transport to Europe, the Incoterm you sign today determines the invoice you receive tomorrow.
Preparing an import or export shipment? Hitek Logistic Morocco supports you in choosing the right logistics solution, coordinating transport, preparing documentation, and monitoring your international operations. Contact our team at hitek.ma/contact.
This article is a practical guide, not legal advice. Always validate your chosen Incoterm with your commercial contract, your freight forwarder, and, when necessary, a legal or customs advisor. Sources: Incoterms® 2020, International Chamber of Commerce (ICC). Incoterms® is a registered trademark of the ICC.