Incoterms for Shipments From Bangladesh: All 11 Rules Explained

Incoterms for shipments from Bangladesh decide, for every order you place, who arranges each leg of the journey, who pays for it, who clears customs on each side, and at exactly what point the risk of loss or damage passes from the Bangladeshi seller to you. The Incoterms® rules are eleven three-letter trade terms published by the International Chamber of Commerce (ICC), first published in 1936 and used in contracts for the sale of goods to clarify the tasks, costs and risks involved in delivery from seller to buyer.¹ Get the rule and the named place right, in the form "FOB Chattogram, Incoterms® 2020", and most arguments about freight bills and damaged cartons never happen.

This guide covers all 11 rules in one table, shows how each one works on a shipment out of Bangladesh, and explains how to choose between them and how to compare quotes written on different rules.

Key takeaways

• There are 11 rules in Incoterms® 2020, published by the ICC. Seven work for any mode of transport; four, FAS, FOB, CFR and CIF, work only for sea and inland waterway transport.²

• Every rule answers three questions: where delivery happens, when risk passes, and who pays for which costs. A rule does not set the price, the payment terms, or when ownership passes.

• In the "C" rules (CFR, CIF, CPT, CIP), cost and risk split: the seller pays carriage to the named destination, but risk passes much earlier, when the goods are handed to the carrier or loaded on board.

• In the "D" rules (DAP, DPU, DDP), the seller carries risk almost to your door. DDP is the only rule where the seller also clears import customs and pays import duty.

• For container cargo handed over at a terminal in Bangladesh, FCA, CPT or CIP usually describe the handover more accurately than FOB, CFR or CIF.

All 11 Incoterms® 2020 rules at a glance

Read the cost columns together with the risk column. In several rules they point in different directions, and that split causes most disputes. Under all 11 rules, the transfer of risk coincides with delivery, so the delivery point in the table is also the point where risk passes to you.³

Seller obligation grows down the list, from EXW (least) to DDP (most). Only CIF and CIP oblige the seller to buy insurance for the buyer, and at different levels. Under every other rule, arrange insurance yourself or agree in the contract that the seller will add it.

What Incoterms® rules do, and what they do not do

The current edition is Incoterms® 2020, which entered into force on 1 January 2020.¹ Each rule allocates delivery, carriage, insurance, export and import clearance, checking and packing between seller and buyer, and states who bears each cost.

A rule does not identify the goods or set their price, say how or when you pay, say when ownership passes, or decide liability for faulty or late goods. Those points belong in your sales contract. Always write the rule, the named place and the edition together, for example "FOB Chattogram, Incoterms® 2020". A bare "FOB" leaves the risk point open to argument, because the named place fixes where delivery happens.

The two families: any mode versus sea only

Seven rules, EXW, FCA, CPT, CIP, DAP, DPU and DDP, work for any mode or modes of transport. Four rules, FAS, FOB, CFR and CIF, are for sea and inland waterway transport only, because delivery under those rules is defined by the vessel: alongside it or on board it.²

This matters in Bangladesh: containers are usually handed to the carrier at a yard, depot or terminal before loading on board, so FCA, and for seller-paid carriage CPT or CIP, often matches the real handover better than FOB, CFR or CIF. For air freight from Dhaka, use only the any-mode rules. For bulk and break-bulk cargo loaded directly at the port, the sea-only rules describe the operation as it actually happens.

The rules in Bangladesh, group by group

Departure: EXW

Under EXW (Ex Works), the seller makes the goods available at its premises or another named place, not loaded on a collecting vehicle and not cleared for export. Delivery and risk transfer occur when the goods are placed at your disposal at that named place.³ You pay for collection, export clearance, carriage, insurance and import. EXW looks cheap because none of the journey is in the price, and it only works for a foreign buyer with a forwarder in Bangladesh. Without one, FCA is the safer minimum. See the EXW guide.

Shipment, carriage unpaid: FCA, FAS and FOB

Under FCA (Free Carrier), the seller delivers the goods, cleared for export, to the carrier or person you nominate at the named place, loading your vehicle if that place is the seller's premises. Incoterms® 2020 also allows an agreed mechanism under which the carrier issues an on-board bill of lading to the seller after loading, which matters for letter-of-credit sales.⁴ FCA is the recommended alternative to FOB for containers, because its delivery point matches the terminal handover.

Under FAS (Free Alongside Ship), the seller delivers alongside the vessel you nominate at the named port of shipment; you load and pay for sea carriage. FAS suits bulk and break-bulk cargo at Chattogram or Mongla, rarely containers.

Under FOB (Free On Board), the seller delivers on board your nominated vessel at the named port of shipment, cleared for export; you book freight, decide insurance, and handle destination onward.³ FOB Chattogram remains the workhorse for Bangladeshi garments. Full guide: FOB Free On Board.

Shipment, carriage paid: CFR, CIF, CPT and CIP

The four "C" rules share one trap: the seller pays for carriage to a named destination, but delivery and risk pass at origin, when the goods are handed to the carrier or loaded on board.⁵ Never read a "C" price as "the seller is responsible until my port". Responsibility for damage follows the risk point, not the freight invoice.

Under CFR (Cost and Freight), the seller delivers the goods on board at origin and pays freight to the named destination port. Risk passes on board at origin, and the seller has no obligation to insure your risk. If you buy on CFR terms, arrange your own marine insurance from the moment of loading.

Under CIF (Cost, Insurance and Freight), as CFR plus seller-bought marine insurance for your benefit, at minimum level: in Incoterms® 2020, Institute Cargo Clauses (C) remains the default level of cover for CIF, with the option to agree a higher level.⁴ Agree Clauses (A) or buy top-up cover if you need more. CIF is not a delivered price: import clearance, duty and onward transport remain yours. Full guide: CIF Cost, Insurance and Freight.

Under CPT (Carriage Paid To), the seller pays carriage to the named destination (any mode), but delivery and risk pass at handover to the first carrier.

Under CIP (Carriage and Insurance Paid To), as CPT plus insurance, but at wide cover: Incoterms® 2020 requires cover compliant with Institute Cargo Clauses (A) or similar clauses.⁴ CIP is often a balanced term for air freight and containers.

Arrival: DAP, DPU and DDP

Under the "D" rules, the seller delivers the goods and transfers risk at the named place of destination, so the place of delivery and the place of destination coincide, and the seller bears cost and risk up to that point.⁵

Under DAP (Delivered at Place), the seller bears cost and risk to the named place in your country, ready for unloading; you unload, clear import customs and pay duty. Name the full warehouse address, because that is where the seller's risk ends.

Under DPU (Delivered at Place Unloaded), the seller also unloads at the named place, the only rule requiring seller unloading. Incoterms® 2020 renamed the former DAT to DPU to emphasise that the place of destination can be any place, not just a terminal.⁴ Agree what happens if import clearance is delayed.

Under DDP (Delivered Duty Paid), the seller bears maximum obligation, including import clearance and duty. Check the importer-of-record and VAT assumptions behind any surprisingly low DDP price before you rely on it.

How to choose Incoterms for shipments from Bangladesh

Ask five questions. (1) Mode: any-mode rules if any leg is air, road or a terminal handover; sea-only rules only for direct on-board sea shipments. (2) Freight capability: FCA or FOB if you hold forwarder rates; a "C" or "D" rule if you want the seller to arrange carriage. (3) Customs: keep Bangladesh export clearance with the seller (avoid unmanaged EXW) and import clearance with yourself (avoid DDP unless the seller has a compliant import route). (4) Risk and insurance: insure from the risk point in the table, and check the level of any seller-bought cover. (5) Operability: do not agree a term requiring a licence or tax registration either party lacks.

For a first garment container order, buyers typically land on FCA or FOB with a forwarder, CIF or CIP for a seller-arranged insured leg, or DAP for a near-delivered price.

How to compare two quotes on different rules

Never compare an FOB price with a CIF or DAP price directly: they contain different journeys. Price every quote to the same point, ideally your warehouse, adding each cost the rule leaves to you (freight and insurance for FOB; destination handling, duty, broker fees and inland delivery where the rule leaves them to you), using real forwarder quotes and checking insurance levels, named places, currency and validity. See the landed cost guide.

Example figures: one container, three rules

Example figures only, for illustration. The same container of garments is quoted at USD 18,000 FOB Chattogram, USD 19,400 CIF Rotterdam and USD 20,900 DAP your warehouse. Ocean freight is USD 1,150, marine insurance USD 120, and destination handling, duty, broker fees and inland delivery total USD 2,050 under FOB and CIF, and USD 650 under DAP, where duty and import clearance remain yours.

Priced to your warehouse, FOB totals USD 21,320 (18,000 + 1,150 + 120 + 2,050), CIF totals USD 21,450 (19,400 + 2,050, freight and minimum insurance already inside the price), and DAP totals USD 21,550 (20,900 + 650). The lowest headline price is not the lowest landed price, and the CIF option carries only minimum insurance while the FOB option lets you buy wider cover yourself.

Common mistakes on Bangladesh shipments

• Leaving out the named place or edition ("FOB Bangladesh" names no port).

• Using FOB or CIF for depot-handed containers without discussing FCA or CIP.

• Assuming CIF insurance is full cover; it is minimum cover unless you agree more.

• Treating the rule as a payment term; it does not say how or when you pay.

• Agreeing EXW with no export-clearance help from the seller.

• Agreeing DDP without checking the importer of record.

• Paying destination handling twice; ask which destination charges a "C" or "D" freight price already includes.

Comparisons buyers ask about most

The pairs buyers weigh most often are FOB versus CIF, EXW versus FOB, FCA versus FOB, CIF versus CIP, DAP versus DDP and DAP versus DPU. Each pair turns on the same three checks used throughout this guide: the delivery point, the risk point and the cost split in the table above.

Frequently asked questions

What are the 11 Incoterms® 2020 rules?

The 11 rules are EXW (Ex Works), FCA (Free Carrier), FAS (Free Alongside Ship), FOB (Free On Board), CFR (Cost and Freight), CIF (Cost, Insurance and Freight), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid). Seven work for any mode of transport; FAS, FOB, CFR and CIF are for sea and inland waterway transport only.²

Which Incoterm is most common for shipments from Bangladesh?

FOB Chattogram is the most familiar term for sea shipments of garments and other containerised goods from Bangladesh, because the seller handles export and loading while the buyer controls ocean freight. CIF is also common for first orders. FCA is increasingly recommended for containers handed over at a terminal, because its delivery point matches that handover.

What is the difference between FOB and CIF?

Under both rules delivery and risk pass when the goods are on board at the port of shipment. The difference is cost: under FOB the buyer books and pays for ocean freight and any insurance, while under CIF the seller pays freight to the destination port and buys minimum marine insurance for the buyer's benefit. A CIF price is therefore higher, but it is not a duty-paid or warehouse-delivered price.

Does CIF include import duty?

No. CIF never includes import clearance, import duty or destination taxes. The seller's price covers the goods, minimum insurance and freight to the named destination port only. The buyer clears the goods at destination and pays duty and taxes. DDP is the only Incoterms® 2020 rule where the seller pays import duty.

Which Incoterm gives the buyer the least work?

DDP gives the buyer the least work: the seller arranges carriage, clears both export and import customs, pays import duties and taxes, and delivers to the named place ready for unloading. That convenience depends on the seller being able to act compliantly in the buyer's country, so verify the arrangement before relying on a DDP quote.

Should I use FOB for container shipments?

You can, and many Bangladesh shipments do, but check whether FCA describes your handover better. FOB delivery happens on board the vessel, while a container is usually handed to the carrier at a terminal or depot earlier. FCA, CPT and CIP were designed for that kind of handover and avoid a gap between physical custody and the contractual risk point.³

What is the difference between CIF and CIP insurance?

Both rules require the seller to buy insurance for the buyer, but at different levels. CIF requires minimum cover, Institute Cargo Clauses (C) or similar. CIP requires wide cover, Institute Cargo Clauses (A) or similar.⁴ Always check the actual policy or certificate, whatever rule you use.

How should an Incoterm be written in a contract?

Write the rule, the named place or port, and the edition, for example "FOB Chattogram, Incoterms® 2020" or "DAP [full warehouse address], Incoterms® 2020". The named place defines where delivery and risk transfer happen, so be precise; a city alone may not be enough for the "D" rules.

Incoterms® is a trademark of the International Chamber of Commerce. This guide summarises the rules in its own words and is not the official ICC text; the full rules are available from the ICC.

Next steps on Exportain

State the rule, named place and edition in your RFQ so every supplier prices the same obligation. You can browse Bangladeshi suppliers, post your requirement as an RFQ with the term stated, and follow the steps in How to Buy before you confirm an order.