Incoterms 2020: What They Are and How UK Businesses Use Them

When you ship goods from the UK to Europe, the US, or anywhere else, Incoterms 2020, a set of 11 internationally recognized trade rules published by the International Chamber of Commerce. Also known as International Commercial Terms, they tell you exactly who is responsible for costs, risks, and paperwork at every stage of shipping. These aren’t suggestions—they’re legal anchors in contracts. Skip them, and you could end up paying for customs fees you didn’t expect, losing control of your goods mid-shipment, or getting stuck with a damaged load because no one clarified who was liable.

Incoterms 2020 cover everything from who loads the truck at the factory to who clears customs at the destination port. For UK exporters, FOB, Free On Board means you’re responsible until the goods are on the ship. With DAP, Delivered At Place, you deliver to the buyer’s door—but they handle unloading and import taxes. And EXW, Ex Works, puts nearly all the burden on the buyer from day one. Choosing the wrong term can cost you money, delay shipments, or even break relationships with overseas clients.

UK businesses use these terms daily—not just in big manufacturing deals, but also in small e-commerce exports, wholesale orders, and even service-based shipments like machinery or prototypes. The same rules apply whether you’re sending 10 boxes or 100 pallets. What matters is clarity. If your contract says "FOB London" without specifying the port, you’re asking for trouble. If your supplier says "we’ll handle everything" but doesn’t name the Incoterm, they might be hiding hidden costs.

Many UK companies still rely on old terms like Incoterms 2010, or worse—make up their own. That’s risky. Customs officials, freight forwarders, and insurers all work off the 2020 version. If your paperwork doesn’t match, your shipment can get held up—or denied. Even small mistakes, like mixing up CIF and CIP, can mean paying double for insurance or getting stuck with import VAT you thought someone else covered.

What you’ll find below are real guides from UK businesses that have been through it. How to pick the right Incoterm for your product. How to write it into contracts so it’s legally solid. How to train your team so no one accidentally agrees to DDP when they meant DAT. And how to use these terms to negotiate better rates with carriers, avoid customs surprises, and keep your cash flow steady.