Incoterms® 2020 for Steel Trade — Rules Explained

The 11 Incoterms® 2020 rules

Incoterms® rules split the tasks, costs and risks of delivering goods between seller and buyer. They say who books and pays the main transport, who insures, who clears customs at each end and at which point the risk of loss or damage moves to the buyer. They do not decide when ownership passes, how or when the buyer pays, or what happens if the contract is broken — the sale contract has to do that.

Always write the rule with a precise named place and the edition, for example CFR Jebel Ali, UAE — Incoterms® 2020.

Rule	Main carriage paid by	Insurance	Export clearance	Import clearance & duties	Risk passes to the buyer
Any mode of transport, including multimodal and containers
EXW Ex Works	Buyer	No obligation	Buyer	Buyer	When the goods are put at the buyer's disposal at the seller's works, not loaded.
FCA Free Carrier	Buyer	No obligation	Seller	Buyer	When the seller hands the goods to the buyer's carrier at the named place (loaded, if that place is the seller's own premises).
CPT Carriage Paid To	Seller	No obligation	Seller	Buyer	When the seller hands the goods to the first carrier — even though the seller pays carriage to the destination.
CIP Carriage and Insurance Paid To	Seller	Seller — broad cover (Institute Cargo Clauses A)	Seller	Buyer	As CPT: on handing to the first carrier.
DAP Delivered at Place	Seller	No obligation	Seller	Buyer	At the named destination, on the arriving vehicle, ready for unloading.
DPU Delivered at Place Unloaded	Seller	No obligation	Seller	Buyer	At the named destination, once unloaded — the only rule where the seller unloads.
DDP Delivered Duty Paid	Seller	No obligation	Seller	Seller	At the named destination, ready for unloading, cleared for import with duties paid.
Sea and inland waterway only
FAS Free Alongside Ship	Buyer	No obligation	Seller	Buyer	When the goods are placed alongside the buyer's vessel at the port of shipment.
FOB Free On Board	Buyer	No obligation	Seller	Buyer	When the goods are on board the vessel at the port of shipment.
CFR Cost and Freight	Seller	No obligation	Seller	Buyer	When the goods are on board at the port of shipment — although the seller pays the freight to the destination port.
CIF Cost, Insurance and Freight	Seller	Seller — minimum cover (Institute Cargo Clauses C)	Seller	Buyer	As CFR: on board at the port of shipment.

Under the C rules the seller pays the main carriage, but the risk has already passed at origin: a cargo damaged at sea under CFR is the buyer's loss, and the buyer's claim is against the carrier or insurer. Under CIF and CIP the seller must insure in the buyer's favour for at least 110% of the contract value.

Where risk passes — at a glance

Green is the stretch at the seller's risk, orange at the buyer's; the dark line is the point where risk passes.

EXW

FCA

CPT

CIP

DAP

DPU

DDP

FAS

FOB

CFR

CIF

Seller's riskBuyer's risk

Choosing a rule for steel

Bulk and break-bulk (billets, coils, plates, rebar on a chartered or liner vessel): FOB, CFR and CIF are the usual rules, with the port named. Agree who pays loading, stowage and lashing — FOB "stowed and trimmed" or "liner terms" — because the rules leave room for argument there.
Containers: the goods are handed to the carrier at a container yard before they are on board, so FCA, CPT or CIP fit better than FOB, CFR or CIF. Under FOB the seller carries risk for goods it no longer controls.
Letters of credit: a bank pays against documents, so the rule has to produce the documents the credit asks for — an on-board bill of lading under CFR or CIF, an insurance certificate under CIF or CIP.
DDP into the GCC needs a seller able to act as importer of record and pay duty and VAT in the buyer's country; most foreign mills cannot, so DAP is the usual delivered rule.

Incoterms® and the Incoterms® 2020 logo are trademarks of the International Chamber of Commerce. The rules are published by the ICC — iccwbo.org — Incoterms® 2020. This page is a plain-language summary, not the rules.

Bill of lading — key terms

The bill of lading is the carrier's receipt for the cargo, evidence of the contract of carriage and — when issued "to order" — the document of title that the buyer needs to collect the goods.

Shipper: The party that hands the cargo to the carrier — usually the seller.
Consignee: The party entitled to take delivery. "To order" or "to order of [a bank]" makes the bill negotiable, which is what a letter of credit normally asks for.
Notify party: Who the carrier tells when the vessel arrives — often the buyer or its agent. Being the notify party gives no right to the cargo.
Shipped on board: Confirms the goods were actually loaded, with the date. Letters of credit require an on-board bill; the on-board date is the shipment date that counts.
Received for shipment: The carrier has the goods but they are not yet loaded. It needs an on-board notation to serve under most letters of credit.
Clean bill: No remark about defective goods or packing. A "claused" or "foul" bill carries such remarks — common with steel ("rust stained", "edges damaged") — and a bank can refuse it.
Original bills (e.g. 3/3): A bill of lading is issued in a set of originals. One original is enough to collect the cargo, so the full set changes hands with payment.
Freight prepaid / collect: Whether the seller has paid the freight (CFR, CIF) or the buyer pays at destination (FOB, FAS).
Telex release / express bill: The carrier releases the cargo at destination without an original bill, on the shipper's instruction. Quick, but it gives up the security of the original.
Sea waybill: A non-negotiable transport document: delivery is to the named consignee without presentation. Used between related companies or when payment is already settled.
Charter party bill: Issued under a charter of the whole vessel, typical for bulk and break-bulk steel. Its terms point to the charter party, which the buyer should see.
Said to contain / shipper's load and count: The carrier records only what it was told, not what it checked — usual for sealed containers.
Laytime and demurrage: Not on the bill itself, but agreed alongside it: the time allowed to load or discharge, and the daily rate charged when it runs over.

Container sizes

Container	External L × W × H, mm	Typical internal L × W × H, m	Typical capacity, m³	Typical tare, kg
20 ft dry (20' GP)	6,058 × 2,438 × 2,591	5.90 × 2.35 × 2.39	33	2,200–2,300
40 ft dry (40' GP)	12,192 × 2,438 × 2,591	12.03 × 2.35 × 2.39	67	3,700–3,800
40 ft high cube (40' HC)	12,192 × 2,438 × 2,896	12.03 × 2.35 × 2.69	76	3,800–4,000

External sizes are the ISO 668 dimensions; ISO 668 rates these containers at up to 30,480 kg gross. Internal sizes, tare and the maximum payload vary by builder and carrier — read them off the container's plate or ask the line. Steel fills a container's weight limit long before its volume, and road weight limits at either end are often lower than the container's own rating.