Incoterms 2026 Rules Guide for Imports from China

What are Incoterms?

Incoterms, an abbreviation for International Commercial Terms, constitute a universally recognized set of regulations that define the responsibilities for the international carriage of goods. Originally formulated by the International Chamber of Commerce (ICC) in 1936, these terms are revised periodically, typically every ten years, to stay aligned with evolving global trade practices.

These standardized terms specify the exact delivery conditions within a sales contract, addressing critical elements including transport obligations, insurance, customs procedures, duties, taxes, and the precise point at which risk transfers from seller to buyer.

How are the Incoterms Structured?

The Incoterms are comprised of 11 distinct rules, organized into four primary groups. Each group defines a specific framework for allocating risks, responsibilities, and costs between the buyer and seller. This classification is applicable irrespective of the transportation method employed or the type of merchandise being shipped.

• • Group “E”: Under this category, the seller’s obligation is fulfilled by making the goods available at their own premises or a specified location.

• • Group “F”: This group obligates the seller to deliver the goods to a carrier nominated by the buyer, with the seller not bearing the cost of main carriage.

• • Group “C”: Here, the seller contracts and pays for the main transport to the destination, but the risk of loss or damage passes to the buyer once the goods are handed over to the first carrier.

• • Group “D”: This category places maximum obligation on the seller, who assumes all costs and risks for delivering the goods to an agreed-upon point in the country of destination.

The Incoterms 2024 Reform

While retaining the same number of 11 core rules as the prior edition, the 2024 version introduces key refinements to better reflect contemporary logistics and commercial realities.

Multimodal Incoterms

This set of terms is applicable for any mode or combination of transport modes, making them particularly suitable for containerized shipments that move via multiple carriers (e.g., truck, rail, ship).

Incoterms EXW and FCA

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  • EXW – Ex Works: This rule imposes the minimum obligation on the seller, requiring only that the goods are packed and made available at their premises. The buyer shoulders all costs and risks from that point forward, including loading and export formalities, which can be a significant challenge for international buyers.
• For more information on the EXW Incoterm.

• • FCA – Free Carrier: This term offers two primary options based on the agreed delivery point. The seller either loads the goods onto the buyer’s transport at their own facility or delivers them, unloaded, to another specified location. This structure allows the seller to handle export customs clearance, a distinct advantage over EXW.
• For more information on the FCA Incoterm.

Incoterms CPT and CIP

• • CPT – Carriage Paid To: Under this term, the seller bears the cost of freight to the named destination. However, the risk of loss or damage transfers from the seller to the buyer upon delivery to the first carrier, not at the final destination.
• For more information on the CPT Incoterm.

• • CIP – Carriage and Insurance Paid To: Similar to CPT, this term requires the seller to also procure and pay for minimum insurance coverage against the buyer’s risk of loss or damage during carriage. It is commonly used for containerized shipments where the seller maintains greater routing control.
• For more information on the CIP Incoterm.

Incoterms DAP, DPU, and DDP

The “D” rules signify that delivery takes place within the destination country, with the seller assuming virtually all risks and costs up to that point.

• • DAP – Delivered At Place: Goods are considered delivered when they are placed at the buyer’s disposal at the agreed destination, ready for unloading. The seller bears all costs and risks of transport to that point, while the buyer is responsible for import clearance and duties.
• For more information on the DAP Incoterm.

• • DPU – Delivered at Place Unloaded: This term, which superseded DAT, adds the obligation for the seller to unload the goods at the named destination. The seller bears all risks and costs until the goods are unloaded and made available to the buyer.
• For more information on the DPU Incoterm.

• • DDP – Delivered Duty Paid: This term represents the seller’s maximum obligation. The seller is responsible for delivering the goods to the named place in the destination country, having cleared the goods for import and paid all relevant duties, taxes, and official charges.
• For more information on the DDP Incoterm.

The Maritime Incoterms

The four maritime-specific Incoterms apply exclusively to shipments where delivery is completed by the seller placing the goods on board a vessel at a seaport or inland waterway port.

Incoterms FAS and FOB

• • FAS – Free Alongside Ship: Under this term, the seller fulfills their delivery obligation when the goods are placed alongside the vessel (e.g., on the quay or a barge) at the named port of shipment. Risk and cost transfer to the buyer at this point.

• • FOB – Free On Board: Here, delivery is complete and risk transfers when the goods pass the ship’s rail at the agreed port of shipment. The seller is responsible for all costs and risks up to that moment.
• For more information on the FOB Incoterm.

Incoterms CFR and CIF

• • CFR – Cost and Freight: With CFR, risk transfers to the buyer once the goods are on board the ship at the port of shipment. However, the seller must contract and pay for the cost and freight necessary to bring the goods to the named port of destination.

• • CIF – Cost, Insurance, and Freight: This term is identical to CFR, with the added obligation that the seller must also obtain minimum insurance coverage against the buyer’s risk of loss or damage during the sea voyage.

Key Changes in Incoterms 2024

• • Bills of Lading with On-Board Notation: The 2024 revisions provide a mechanism allowing sellers using FCA terms to satisfy documentary requirements under letters of credit. Sellers can request a transport document from the carrier confirming the goods have been loaded, which facilitates payment processes.

• • Insurance Coverage Adjustments: The rules now differentiate the minimum insurance coverage required under CIF and CIP. CIP now mandates broader “Institute Cargo Clauses (A)” or equivalent coverage, while CIF retains the less comprehensive “Institute Cargo Clauses (C),” clarifying seller obligations and potential cost implications.

• • Transition from DAT to DPU: The formal change from Delivered at Terminal (DAT) to Delivered at Place Unloaded (DPU) provides greater flexibility, as the delivery point is no longer restricted to a “terminal.” This also simplifies customs valuation by making the seller’s unloading costs part of the delivered value.