Delivery terms (Incoterms 2020)
Eleven three-letter terms decide who pays for which leg, who clears customs and when risk passes, and therefore what the invoice price does and does not include. That last part is what customs valuation is built on: an EXW price that looks cheaper than a CIF quote may cost more once every missing leg is added back.
Who does what, when risk passes
A plain-language summary of the main obligations. The authoritative rules are ICC's Incoterms® 2020 publication.
- EXWEx Works
Risk passes: At the seller's premises
Seller pays: Only packing and making goods available at their premises
Clearance exp. · imp.: Buyer · Buyer
- FCAFree Carrier
Risk passes: On handover to the buyer's nominated carrier at the agreed place
Seller pays: Delivery to the handover point and export clearance
Clearance exp. · imp.: Seller · Buyer
Risk passes: Alongside the ship at the loading port
Seller pays: Delivery alongside the ship and export clearance
Clearance exp. · imp.: Seller · Buyer
Risk passes: On board the ship at the loading port
Seller pays: Loading on board and export clearance
Clearance exp. · imp.: Seller · Buyer
Risk passes: On board at the loading port (though the seller pays freight to destination)
Seller pays: As FOB, plus sea freight to the destination port
Clearance exp. · imp.: Seller · Buyer
- CPTCarriage Paid To
Risk passes: On handover to the first carrier (though the seller pays carriage to destination)
Seller pays: As FCA, plus carriage to the agreed destination
Clearance exp. · imp.: Seller · Buyer
Risk passes: On board at the loading port
Seller pays: As CFR, plus minimum-cover insurance for the buyer
Clearance exp. · imp.: Seller · Buyer · Seller must buy minimum-cover insurance for the sea leg
- CIPCarriage and Insurance Paid To
Risk passes: On handover to the first carrier
Seller pays: As CPT, plus high-cover insurance for the buyer
Clearance exp. · imp.: Seller · Buyer · Seller must buy high-cover insurance for the whole carriage
- DAPDelivered At Place
Risk passes: At the named destination, ready for unloading
Seller pays: The whole carriage to destination (unloading and import clearance excluded)
Clearance exp. · imp.: Seller · Buyer
- DPUDelivered at Place Unloaded
Risk passes: After unloading at the named destination
Seller pays: The whole carriage plus unloading at destination
Clearance exp. · imp.: Seller · Buyer
- DDPDelivered Duty Paid
Risk passes: At the named destination, import-cleared
Seller pays: Everything: carriage, both clearances and destination taxes
Clearance exp. · imp.: Seller · Seller
From invoice price to customs value
Vietnam values imports at the price up to the FIRST import gate and exports at the price at the export gate (Circular 39/2015/TT-BTC, amended by 60/2019/TT-BTC) — so each term's price needs these adjustments. Declaring an FOB price as-is understates import duty; found in a post-clearance audit it means back-collection plus late-payment penalties.
| Term | Importing into Vietnam | Exporting from Vietnam |
|---|---|---|
| EXW | add int'l freight, add insurance try it → | add cost to the export gate try it → |
| FCA | add int'l freight, add insurance try it → | add cost to the export gate try it → |
| FAS | add int'l freight, add insurance try it → | = invoice price try it → |
| FOB | add int'l freight, add insurance try it → | = invoice price try it → |
| CFR | add insurance try it → | deduct int'l freight try it → |
| CPT | add insurance try it → | deduct int'l freight try it → |
| CIF | = invoice price try it → | deduct int'l freight, deduct insurance try it → |
| CIP | = invoice price try it → | deduct int'l freight, deduct insurance try it → |
| DAP | deduct out-of-scope costs* try it → | deduct int'l freight, deduct insurance, deduct out-of-scope costs* try it → |
| DPU | deduct out-of-scope costs* try it → | deduct int'l freight, deduct insurance, deduct out-of-scope costs* try it → |
| DDP | deduct out-of-scope costs* try it → | deduct int'l freight, deduct insurance, deduct out-of-scope costs* try it → |
* Deductible only when shown separately on the documents, for example inland transport beyond the import border gate; under DDP, also the Vietnamese taxes included in the price (for exports, the destination country's costs and taxes).
A reference summary in HSCodeVN's own words. "Incoterms" is a registered trademark of the International Chamber of Commerce (ICC), and the official rules are published by ICC. Customs valuation for a specific shipment follows the customs authority's determination.