Incoterms are eleven three-letter rules published by the International Chamber of Commerce. They divide delivery, risk and cost between seller and buyer. They do not price the goods, do not transfer ownership and do not settle a quality dispute.
The current edition, Incoterms 2020 (ICC publication 723), took effect on 1 January 2020 and replaced Incoterms 2010. Earlier editions remain usable if the parties choose them, which is precisely why the edition has to be named. Write CIF Mundra, Incoterms 2020 — not CIF Mundra, and never CIF Mundra, latest Incoterms. A rule without an edition and without a properly specified place is an argument waiting for a trigger.
Each rule is set out as ten matched obligations, A1 to A10 for the seller and B1 to B10 for the buyer. Between them they answer:
In bitumen those omissions bite harder than in most trades, because the product arrives hot or arrives in steel that can be dented, and because the contested figure is usually tonnage rather than delivery. An Incoterm tells you who owns the problem. The sale contract has to tell you what the problem costs.
The first letter is a reliable shorthand. E (EXW) is departure — the seller does the least. F rules mean main carriage unpaid by the seller: the buyer books the ship. C rules mean main carriage paid by the seller, but risk still transfers at origin. D rules mean the seller carries risk all the way to the agreed destination.
These seven rules cover every containerised, road and multimodal bitumen movement, and they can be used for a sea leg as well. They are the correct family for drums, jumbo bags, poly bags and bitutainers.
The seller places the goods at the buyer's disposal at its own premises or another named place, not loaded and not cleared for export. Risk transfers at that moment. Everything after it — loading the truck, inland haulage, export declaration, terminal handling, freight, import — is the buyer's.
For bitumen exports EXW is almost always the wrong choice. The buyer, usually a foreign company, cannot practically file an export declaration in the country of loading, and without that declaration there is no clean export record, no certificate of origin trail and often no route to the documents the destination customs will demand. If a forklift punctures a drum while the buyer's driver is loading it, the loss is already the buyer's. Where a seller genuinely wants minimum obligation, FCA at the seller's premises achieves nearly the same commercial result while keeping export clearance where it can actually be performed.
FCA has two delivery points and you must know which one you have bought.
The seller clears the goods for export. FCA is the natural rule for drummed or bagged bitumen handed over at an origin depot, and it is the direct replacement for FOB in container trade. The 2020 edition added the on-board bill of lading option: the parties may agree that the buyer instructs its carrier to issue the seller a transport document carrying an on-board notation, at the buyer's cost and risk. That closes the long-standing gap between FCA and a letter of credit that insists on a shipped bill of lading.
The seller contracts and pays for carriage to the named destination, but risk transfers when the goods are handed to the first carrier. If the movement involves a haulier to the port, an ocean carrier and a haulier at the far end, risk passes at the first of those three. CPT is the container equivalent of CFR. Unloading at destination is the buyer's cost unless the seller's freight contract already includes it, in which case the buyer does not pay twice.
CPT plus an insurance duty. Since 2020 that duty is Institute Cargo Clauses (A) or similar all-risks cover, for at least 110 % of the contract value, in the contract currency, running from the delivery point to at least the named destination. The buyer must be able to claim directly under the policy, so the seller has to provide the policy or certificate. The parties may agree a lower level in writing, but the default is all-risks. For drummed bitumen in containers — where the realistic losses are pilferage, water ingress, crushing and handling damage — CIP is the only rule whose default insurance actually responds.
The seller carries all cost and all risk to the named destination and places the goods at the buyer's disposal on the arriving vehicle, ready for unloading. The buyer unloads and the buyer clears import, pays duty and pays any VAT. DAP suits deliveries to an asphalt plant or depot that has its own handling equipment. For a bitutainer or a bulk road tanker, DAP is only workable if the receiving site has heated discharge capability, because the seller's obligation ends at the moment the vehicle presents itself, not when the tank is empty.
DPU is DAP with one addition, and it is the only rule in the entire set that requires the seller to unload. Risk stays with the seller until unloading is complete. Import clearance remains the buyer's.
Sellers should treat DPU carefully. Unloading at a place you do not control means depending on someone else's equipment, someone else's crew and someone else's site rules, while still carrying the risk. For hot product it is a genuine safety exposure as well as a commercial one: bitumen discharge is where contact burns happen. Site first aid for a bitumen burn is to cool with clean cold running water for at least 20 minutes, never peel or solvent-strip adhered bitumen — removal is a clinical decision. Do not accept DPU on hot cargo unless you control the discharge point and the people at it.
The maximum seller obligation. The seller delivers at the named destination, ready for unloading, having cleared the goods for import and paid all duties and taxes, VAT included unless expressly agreed otherwise. Risk transfers at that destination point.
DDP looks attractive to buyers and is frequently unrealisable. In most jurisdictions the importer of record must be a locally registered entity able to recover or account for VAT and to hold any product registration required for a petroleum product. A foreign bitumen seller usually cannot be that entity. Where a buyer wants a landed price, the practical structure is DAP with the seller quoting duty and clearance as a separately identified line the buyer's own broker executes.
FAS, FOB, CFR and CIF are restricted to sea and inland waterway carriage. They belong to bulk bitumen parcels loaded into heated tankers, not to containers.
The seller delivers when the goods are placed alongside the vessel nominated by the buyer — on the quay or in a barge — at the named port of shipment. Risk passes at that point and the seller clears for export.
FAS has almost no natural home in bitumen. Bulk bitumen is pumped through shore lines into the vessel's heated tanks, so there is no meaningful moment at which the cargo sits alongside and no practical way to evidence that it did. Drummed cargo does not sit on a quay either; it sits in a container. FAS survives for project cargo and dry bulk loaded by the ship's gear. If someone offers you FAS on bitumen, ask them to describe the physical handover, and see whether the answer is FOB or FCA in disguise.
The seller delivers when the goods are on board the vessel nominated by the buyer at the named port of shipment, or procures goods already so delivered — that second limb exists for string sales, where a cargo is resold repeatedly while afloat. Risk passes on board. The seller clears for export; the buyer contracts and pays for carriage and bears everything from that point.
The old ship's rail language disappeared in the 2010 edition and has not returned: the test is whether the goods are on board, not whether they crossed a notional line. For bitumen, FOB is correct when the cargo is a bulk parcel pumped into a heated tanker the buyer has nominated. It carries two obligations most FOB buyers underestimate. First, the vessel must be genuinely suitable — coil-heated tanks, correct pumping and heating capacity, and acceptance by the load terminal. Nominating an unsuitable ship is the buyer's problem, not the seller's. Second, the buyer must give proper notice of the vessel and the loading window. If the buyer fails to nominate or to give notice, risk can pass from the agreed date or the end of the agreed period, provided the goods have been clearly identified as the contract cargo. A buyer who is late with a nomination can find it already owns bitumen that is still sitting in the seller's shore tank.
The seller contracts and pays for carriage to the named destination port. Risk still passes when the goods are on board at the port of shipment. The seller has no insurance obligation whatsoever under CFR.
CFR plus an insurance duty. The seller must obtain cargo cover for at least 110 % of the contract price, in the currency of the contract, running from the delivery point to at least the named port of destination, and must provide the buyer with the policy or certificate so the buyer can claim directly. The minimum level is Institute Cargo Clauses (C) — and that is where most of the trouble on this page starts. The parties may agree higher cover, and on drummed or bagged cargo they should.
Under every C rule — CFR, CIF, CPT and CIP — the point where cost stops being the seller's and the point where risk stops being the seller's are two different places. The seller pays freight all the way to the discharge port. Risk left the seller at the load port, the moment the cargo was on board. There is no other family of rules in which the two lines diverge like this, and it is the single most misread feature of the system.
Read literally, the consequence is uncomfortable but correct. On a CIF sale, once the parcel is on board:
Two practical conclusions follow. If you are the buyer on CFR or CIF, insure from the load port onwards, check the cover level rather than assuming it, and remember that the named destination in the term is a cost destination, not a risk destination. If you want risk to travel with the freight, you have to buy a D rule — DAP, DPU or DDP — not a C rule. If you are the seller quoting a D rule, understand that you are now carrying voyage risk with no insurance obligation imposed on you at all, and you should be insuring your own exposure whether or not the contract mentions it.
The delivery point in column three is also the risk transfer point in every rule. Read that column first, then column four; where they differ, cost and risk have parted company.
| Rule | Mode | Seller delivers / risk passes | Seller pays carriage to | Seller's insurance duty | Typical bitumen application |
|---|---|---|---|---|---|
| EXW — Ex Works | Any | At the named premises, at the buyer's disposal, not loaded, not export cleared | Nowhere | None | Rarely workable on export; the buyer cannot realistically clear for export |
| FCA — Free Carrier | Any | Loaded on the buyer's vehicle at the seller's premises, or ready for unloading at another named place | The named place of delivery only | None | Drums, jumbo bags and bitutainers handed over at a depot or container yard |
| CPT — Carriage Paid To | Any | At the first carrier, at origin | The named place of destination | None | Containerised bitumen to a destination port or inland depot |
| CIP — Carriage and Insurance Paid To | Any | At the first carrier, at origin | The named place of destination | Yes — ICC (A) all-risks minimum, 110 % of value | Containerised drums and bags where the buyer wants real cargo cover |
| DAP — Delivered at Place | Any | At the named destination, on the arriving vehicle, ready for unloading | The named place of destination | None | Delivery to an asphalt plant or depot that can unload itself |
| DPU — Delivered at Place Unloaded | Any | At the named destination, after the seller has unloaded | The named place, including unloading | None | Only where the seller controls handling or discharge at the destination |
| DDP — Delivered Duty Paid | Any | At the named destination, ready for unloading, import cleared and duty paid | The named place, plus duty and taxes | None | Only where the seller can lawfully act as importer of record |
| FAS — Free Alongside Ship | Sea / inland waterway | Alongside the nominated vessel at the named port of shipment | Alongside the vessel | None | Little practical use; bulk bitumen is pumped, not landed alongside |
| FOB — Free On Board | Sea / inland waterway | On board the vessel at the named port of shipment | On board at the load port | None | Bulk parcels in a heated tanker nominated by the buyer |
| CFR — Cost and Freight | Sea / inland waterway | On board at the port of shipment — not at destination | The named port of destination | None | Bulk parcels where the seller books the tanker and the buyer insures |
| CIF — Cost, Insurance and Freight | Sea / inland waterway | On board at the port of shipment — not at destination | The named port of destination | Yes — ICC (C) minimum only, 110 % of value | Bulk parcels where the buyer wants freight and basic cover in one price |
This is the most common error in bitumen contracting, and it survives because the wrong term still gets the cargo shipped. It only shows up when something goes wrong at the load port.
FOB, CFR and CIF all fix the seller's delivery at the same physical event: the goods placed on board the vessel. The rules were written for cargo the seller itself loads, or watches being loaded, in the hours before the ship sails. Bulk bitumen fits perfectly — the product is pumped from a shore tank through a manifold into a heated tanker, and the moment it enters the vessel is observable, measurable and documented by a surveyor standing there.
Containerised bitumen does not work that way. The seller stuffs drums or bags at a depot, seals the box, and hands it to a carrier at a container yard or inland terminal. From that moment it is in a stack. It may sit for days. It is moved by equipment the seller has never seen, at a facility the seller cannot enter, and it goes on board when the terminal decides. Sell that container FOB and you have created a gap the ICC itself warns against: the seller carries the risk for a period during which it has already lost all control of the goods.
The usual defence of container FOB is that the buyer's bank demands an on-board bill of lading and FCA cannot deliver one. Incoterms 2020 removed that excuse. Under the optional FCA mechanism, the parties agree that the buyer will instruct its carrier to issue the seller a transport document stating the goods have been loaded — a bill of lading with an on-board notation — at the buyer's cost and risk. Write that agreement into the sale contract and into the credit at the same time, so the document the bank wants and the rule the contract uses do not contradict each other.
If the cargo travels in a box, it is FCA, CPT or CIP territory. That covers essentially all packed bitumen: 80 new steel drums of 150 kg net for 12 MT in a 20-foot container, 80 drums of 180 kg net for 14.4 MT, 80 drums of 185 kg net for 14.8 MT, 20 jumbo or poly bags of one tonne each for 20 MT, and a bitutainer or tank container carrying 20–25 MT. None of that is loaded across a ship's side by the seller.
If the cargo is a bulk parcel pumped into a heated tanker — typically 1,000 MT and upwards — then FOB, CFR and CIF are the right family and the on-board moment is real. Match the rule to the physical handover, not to habit or to whatever appeared on the last contract. Note that the classification of the goods does not change with the term: bitumen remains HS 2713.20 whichever rule is used, and the customs entry is unaffected by who paid the freight.
Incoterms 2020 raised the CIP minimum to all-risks and deliberately left CIF at the lowest cover level in the Institute Cargo Clauses. Buyers who treat the two as interchangeable discover the difference only when they claim. Under Clauses (C), a container of drums that arrives soaked, short or pilfered produces nothing.
| Point | CIF | CIP |
|---|---|---|
| Transport modes | Sea and inland waterway only | Any mode, including containerised and multimodal |
| Minimum cover the seller must buy | Institute Cargo Clauses (C) or similar | Institute Cargo Clauses (A) or similar |
| What that level responds to | Named major casualties only — fire or explosion; vessel stranded, grounded, sunk or capsized; overturning or derailment; collision; discharge at a port of distress; jettison; general average sacrifice | All risks of loss or damage, subject to the stated exclusions |
| Water ingress, wetting, rust on drums | Not covered | Covered, subject to exclusions |
| Theft, pilferage, non-delivery of a package | Not covered | Covered, subject to exclusions |
| Handling and stowage damage, crushed or punctured drums | Not covered | Covered, subject to exclusions |
| Loss or expense caused by delay | Excluded | Excluded — the same exclusion applies to all three clause sets |
| Insufficiency of packing | Excluded | Excluded — a direct risk if reconditioned drums are used |
| Minimum sum insured | 110 % of the contract price, in the contract currency | 110 % of the contract price, in the contract currency |
| Geographic scope of cover | From the delivery point to at least the named port of destination | From the delivery point to at least the named place of destination |
| War and strikes cover | Not included; the buyer may request it at the buyer's cost | Not included; the buyer may request it at the buyer's cost |
| Right to claim | Seller must provide the policy or certificate so the buyer can claim directly | Seller must provide the policy or certificate so the buyer can claim directly |
| Change made in Incoterms 2020 | None — unchanged from Incoterms 2010 | Raised from Clauses (C) to Clauses (A) |
| Can the parties vary it? | Yes — a higher level may be agreed, and on packed cargo it should be | Yes — a lower level may be agreed in writing |
The 2020 edition gathers every cost into one article, A9 for the seller and B9 for the buyer. This table restates that allocation as a checklist you can run an offer against before you compare prices.
| Cost or task | Seller's account under | Buyer's account under |
|---|---|---|
| Export packaging, marking and checking | Every rule | None |
| Loading at the seller's works or depot | Every rule except EXW | EXW |
| Inland carriage to the origin port or terminal | FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, DDP | EXW; FCA where the named place is the seller's premises |
| Export clearance, licences and export duties | Every rule except EXW | EXW |
| Origin terminal handling and loading on board | FOB, CFR, CIF, CPT, CIP, DAP, DPU, DDP | EXW, FAS; FCA depends on the named place |
| Main carriage — ocean, air or through freight | CPT, CIP, CFR, CIF, DAP, DPU, DDP | EXW, FCA, FAS, FOB |
| Cargo insurance as a contractual obligation | CIF (Clauses C minimum), CIP (Clauses A minimum) | No obligation under the other nine rules; each side insures its own exposure |
| Discharge from the vessel and destination terminal handling | DAP, DPU and DDP, because the seller must bear every cost of reaching the named place; and CPT, CIP, CFR, CIF where the freight contract already includes it | EXW, FCA, FAS, FOB; and the C rules where discharge is not in the freight |
| Unloading from the arriving vehicle at the named place | DPU only | DAP, DDP and every other rule |
| Import clearance, customs duty and VAT | DDP only | Every rule except DDP |
| On-carriage to the buyer's plant or depot | DAP, DPU, DDP where the plant is the named place | Every other rule |
| Demurrage, detention, free time and storage | Not allocated by any Incoterms rule | Governed by the sale contract and the contract of carriage |
Six checks that take a few minutes each and remove most of the disputes described on this page.
Always the full string: rule, precisely identified place, and Incoterms 2020. A port name alone is often not enough — where loading or discharge is berth or terminal specific, name the terminal, not just the city.
Under CPT, CIP, CFR and CIF the named place is the destination, while risk transfers at origin. If it matters where risk passes — and on hot or fragile cargo it always does — write the delivery point into the contract as well as the destination.
Bulk parcel in a heated tanker: FOB, CFR or CIF. Drums, jumbo bags, poly bags or a bitutainer in a container: FCA, CPT or CIP. If the term and the packing disagree, one of them is wrong.
CIF gives you Clauses (C) unless you say otherwise. Specify Clauses (A), 110 % of invoice value in the contract currency, cover running to the named destination, and the certificate presented with the documents.
DAP means the buyer unloads; confirm the receiving site can do it, particularly for a heated discharge. DPU means the seller unloads; confirm the seller controls that operation. DDP means the seller is importer of record; confirm that is legally possible in the destination country before it is priced.
The rule, the named place, the transport document called for and the shipment window must be identical in the sale contract and the credit. An FOB credit demanding an on-board bill of lading against a container shipment is a discrepancy the bank is entitled to raise, and by then the cargo has sailed.
Eleven standard trade terms published by the International Chamber of Commerce, in force since 1 January 2020. Each rule allocates delivery, risk transfer, carriage, insurance, export and import clearance, documents and costs between seller and buyer. Seven rules — EXW, FCA, CPT, CIP, DAP, DPU and DDP — work with any mode of transport. Four — FAS, FOB, CFR and CIF — apply only to sea and inland waterway carriage.
FCA, CPT or CIP, because drummed bitumen moves in containers. FCA if the buyer books the freight, CPT if you want the seller to pay carriage to destination, and CIP if you also want the seller to insure. CIP is the strongest of the three for a buyer because its default insurance level is all-risks rather than the minimum cover attaching to CIF.
Under FOB the buyer contracts and pays for the vessel and all costs from the moment the cargo is on board at the load port. Under CIF the seller contracts and pays freight to the named discharge port and buys cargo insurance. In both rules risk passes to the buyer at the same physical point — when the goods are on board at the port of shipment. CIF moves cost, not risk.
When the goods are placed on board the vessel at the named port of shipment, not on arrival. Everything that happens during the voyage is at the buyer's risk even though the seller booked and paid for the carriage. If you want the seller to carry voyage risk, you need a D rule such as DAP, not a C rule.
Both require at least 110 % of the contract price in the contract currency, covering from the delivery point to at least the named destination, with the policy or certificate provided so the buyer can claim directly. The levels differ: CIF requires only Institute Cargo Clauses (C), which covers named major casualties, while CIP since 2020 requires Clauses (A) all-risks. Clauses (C) will not answer for water damage, pilferage, non-delivery of a package or handling damage to drums.
You can write it, but it does not describe what happens. The seller hands the sealed container to a carrier at a yard or inland terminal, sometimes days before the ship loads, yet under FOB it keeps the risk until the box is on board — a period during which it has no access to the goods. FCA fixes delivery at the real handover point, and Incoterms 2020 lets the parties agree that the buyer instructs the carrier to issue the seller a bill of lading with an on-board notation where a letter of credit requires one.
Only where the seller can lawfully act as importer of record in the destination country, which usually means holding a local registration and being able to account for import VAT. A foreign bitumen supplier frequently cannot. DDP also puts any product registration or clearance requirement on the seller. Where a buyer wants a landed figure, DAP with duty and clearance quoted as a separate line, executed by the buyer's own broker, is the practical structure. Bitumen classifies under HS 2713.20 regardless of which rule is used.
No. Incoterms deal with delivery, risk, cost, clearance and documents only. They say nothing about price, payment terms, transfer of title, governing law, sanctions, product specification, the quantity measurement basis, or laytime and demurrage. On a heated bitumen tanker, demurrage is often the largest single sum in dispute, and no Incoterms rule allocates a cent of it. It has to be written into the sale contract.
The Incoterm is the single biggest reason two quoted numbers are not comparable.
Send the grade, tonnage, packing, named place and the rule you want priced. If you are not sure whether the rule fits the packing, send the shipment description instead and the offer will name the delivery point, the risk transfer point and the insurance basis explicitly.