Trade terms guide
Incoterms 2020 for transit cargo
The Incoterms rule in your contract decides who pays and who carries the risk on each leg. When goods cross Iran to a third country, the choice matters more than usual.
The eleven rules
| Rule | Name | Mode | In short |
|---|---|---|---|
| EXW | Ex Works | Any mode | The buyer collects at the seller's premises and handles everything, including export clearance. |
| FCA | Free Carrier | Any mode | The seller clears the goods for export and hands them to the buyer's carrier at a named place. |
| CPT | Carriage Paid To | Any mode | The seller pays carriage to a named place; risk passes when the goods are handed to the first carrier. |
| CIP | Carriage and Insurance Paid To | Any mode | As CPT, plus the seller insures the goods. Under Incoterms 2020 the cover must be broad (Institute Cargo Clauses A). |
| DAP | Delivered at Place | Any mode | The seller delivers to a named place, ready for unloading. The buyer handles import clearance. |
| DPU | Delivered at Place Unloaded | Any mode | As DAP, but the seller also unloads at the named place. Replaced DAT in 2020. |
| DDP | Delivered Duty Paid | Any mode | The seller delivers cleared for import, with duties paid. Hard to use when the seller has no presence in the destination country. |
| FAS | Free Alongside Ship | Sea only | The seller places the goods alongside the ship at the port of loading. |
| FOB | Free on Board | Sea only | The seller loads the goods on board the ship at the port of loading. |
| CFR | Cost and Freight | Sea only | The seller pays sea freight to the port of discharge; risk passes on loading. |
| CIF | Cost, Insurance and Freight | Sea only | As CFR, plus minimum insurance (Institute Cargo Clauses C). |
Incoterms are published by the International Chamber of Commerce (ICC). This is a short summary; the full rules are in the ICC publication.
Why sea terms stop at the Iranian port
FOB, CFR and CIF are sea terms. Used for a shipment to Kabul or Tashkent, they end the seller's duties at the port, and the buyer must then organise the transit through Iran: the transit declaration, the guarantee and the inland transport. If the buyer has no partner in Iran, the cargo can wait at the port while this is arranged.
Practical choices for transit
- FCA (seller's factory or port of loading) when the buyer appoints a forwarder for the whole route, including the transit through Iran.
- CPT or CIP to a city in the destination country when the seller organises the whole route but wants the risk to pass early.
- DAP to a named terminal in the destination country when the seller controls delivery and the buyer handles import clearance.
- Avoid EXW for exports from Iran, as the buyer cannot easily clear Iranian export formalities, and be careful with DDP, which puts import clearance in the destination country on the seller.
Always name the place precisely, for example "DAP Herat customs terminal, Incoterms 2020", not just "DAP Afghanistan".
General guidance, last reviewed November 2026. Rules change often; ask us to confirm the requirements for your shipment.