Incoterms® 2020 - Rules for Sea and Inland Waterway Transport Only

FAS Free Alongside Ship

Get the goods to the quay — the buyer boards from there.

🚢 Sea & Inland Waterway Only

"Free Alongside Ship" means the seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment — for example, on a quay or barge. Risk passes at that moment, and the buyer bears all costs from that point onwards.

The parties should specify the loading point at the named port as precisely as possible, as costs and risk to that point are borne by the seller; handling charges may vary by port. The seller must either deliver the goods alongside the vessel or procure goods already so delivered. The reference to "procure" accommodates multiple sales down a chain ("string sales"), which are common in commodity trades.

Where goods are containerized, it is standard practice for the seller to hand them to the carrier at a terminal rather than alongside the vessel. In such cases, FAS is not appropriate and FCA should be used instead. FAS requires the seller to clear the goods for export.

⚠ Risk Transfer: Risk transfers when goods are placed alongside the vessel at the named port — before loading.

FOB Free on Board

Once it's on the ship, it's the buyer's risk.

🚢 Sea & Inland Waterway Only

"Free on Board" means the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment, or procures goods already so delivered. Risk passes when the goods are on board the vessel, and the buyer bears all costs from that moment.

As with FAS, the reference to "procure" caters for string sales common in commodity trades. FOB is not appropriate where goods are handed to the carrier before being loaded on board — for example, containerized cargo delivered at a terminal. In such cases, FCA should be used.

⚠ Risk Transfer: Risk passes when goods cross the ship's rail and are loaded on board at the port of shipment.

CFR Cost & Freight

Seller pays to get it there. But risk travels with the ship.

🚢 Sea & Inland Waterway Only

"Cost and Freight" means the seller delivers the goods on board the vessel (or procures goods already so delivered) and contracts and pays the costs and freight necessary to bring the goods to the named port of destination. Risk passes when the goods are on board the vessel.

This rule has two critical points, because risk passes and costs transfer at different places. While the contract will always specify a destination port, it may not specify the port of shipment — which is where risk passes. If the port of shipment is material to the buyer, it should be identified as precisely as possible in the contract. CFR is not appropriate for containerized cargo delivered at a terminal; CPT should be used in those circumstances. CFR requires the seller to clear the goods for export.

⚠ Risk Transfer: Risk passes at the port of shipment when goods are loaded on board — the buyer bears the risk for the entire sea voyage.

CIF Cost, Insurance & Freight

Seller pays freight and insures the cargo — buyer still carries the voyage risk.

🚢 Sea & Inland Waterway Only

"Cost, Insurance and Freight" means the seller delivers the goods on board the vessel (or procures goods already so delivered), contracts and pays the freight to the named port of destination, and contracts for insurance cover against the buyer's risk of loss or damage during carriage. Risk passes when the goods are on board the vessel.

Under Incoterms® 2020, the seller under CIF must obtain insurance equivalent to Institute of Cargo Clauses (A), which provides all-risks cover subject to listed exclusions. If the buyer requires additional protection, it must negotiate this with the seller or arrange its own supplementary cover.

The reference to "procure" in the delivery obligation accommodates string sales common in commodity trades. CIF is not appropriate where goods are handed to the carrier before being loaded on board — for example, containerized cargo at a terminal; CIP should be used in those circumstances. CIF requires the seller to clear the goods for export.

⚠ Risk Transfer: Risk passes when goods are loaded on board at the port of shipment — the insurance is the buyer's protection, not a shift in risk.

CIF Cost, Insurance & Freight

Seller pays freight and insures the cargo — buyer still carries the voyage risk.

🚢 Sea & Inland Waterway Only

"Cost, Insurance and Freight" means the seller delivers the goods on board the vessel (or procures goods already so delivered), contracts and pays the freight to the named port of destination, and contracts for insurance cover against the buyer's risk of loss or damage during carriage. Risk passes when the goods are on board the vessel.

Under Incoterms® 2020, the seller under CIF must obtain insurance equivalent to Institute of Cargo Clauses (A), which provides all-risks cover subject to listed exclusions. If the buyer requires additional protection, it must negotiate this with the seller or arrange its own supplementary cover.

The reference to "procure" in the delivery obligation accommodates string sales common in commodity trades. CIF is not appropriate where goods are handed to the carrier before being loaded on board — for example, containerized cargo at a terminal; CIP should be used in those circumstances. CIF requires the seller to clear the goods for export.

⚠ Risk Transfer: Risk passes when goods are loaded on board at the port of shipment — the insurance is the buyer's protection, not a shift in risk.