CPT, CIP, and DDP for air cargo. Includes real case studies, tips, and what to avoid." name="description">

Incoterms for Air Freight: 2025 Guide for Traders and Logistics Professionals

Published: July 18, 2025

Air freight is a preferred mode of transport for time-sensitive or high-value goods, especially electronics, garments, pharmaceuticals, or urgent manufacturing components. When you're shipping internationally by air cargo, choosing the right Incoterm (International Commercial Term) is crucial for cost control, risk management, and customs clearance.

In 2025, with rising freight costs and stricter documentation controls under Incoterms 2020 (still valid), understanding these terms is more important than ever.

✅ Best Incoterms for Air Freight

Not all 11 Incoterms are suitable for air freight. Here's a breakdown of the most appropriate and commonly used Incoterms in air transportation:

1. FCA – Free Carrier

Ideal for air freight. The seller delivers goods, cleared for export, to a named place—usually the freight forwarder's warehouse or airport terminal.

• 📦 Seller pays: Export documentation and local delivery to airport.
• ✈️ Buyer pays: Air freight, insurance, import clearance, delivery.

Use Case: A Bangladeshi garment exporter delivers goods to DHL’s Dhaka cargo facility. Risk transfers there. The US buyer arranges the flight.

2. CPT – Carriage Paid To

Seller arranges and pays for main air freight up to the agreed destination, but risk transfers earlier—when goods are handed over to the first carrier.

• 📦 Seller pays: Export, air freight.
• 🧾 Buyer pays: Insurance (optional), import duty.

Use Case: An Indian supplier ships spare parts to Frankfurt under CPT. Risk transfers when goods are handed over to the airline in Delhi.

3. CIP – Carriage and Insurance Paid To

Same as CPT, but the seller also arranges insurance for the goods during transit.

• ✅ Required: Minimum insurance coverage (per Incoterms 2020).
• 💼 Best for: Valuable goods shipped by air.

4. DAP – Delivered At Place

Seller covers all transport and risk up to the agreed delivery location. Buyer handles import duties and clearance.

5. DPU – Delivered at Place Unloaded

Same as DAP, but the seller is also responsible for unloading the goods at destination.

Best for: Heavy shipments requiring special unloading (e.g., machinery).

6. DDP – Delivered Duty Paid

Seller handles everything, including import clearance and duties.

• ⚠️ High risk: Sellers must know buyer’s local laws and taxes.
• ✅ Best for: E-commerce sellers offering all-inclusive delivery (e.g., Amazon).

❌ Incoterms to AVOID for Air Freight

The following Incoterms are designed for sea and inland waterway transport only, not air cargo:

• FOB – Free On Board
• CFR – Cost and Freight
• CIF – Cost, Insurance, and Freight

Why avoid? They assume delivery “on board a vessel,” which doesn’t apply to air freight.

📊 Real Case Study: Air Freight Shipment Using FCA vs DDP

Background:

A Bangladesh-based electronics exporter shipped laptop motherboards to Germany.

Option 1: FCA (Free Carrier)

• Goods delivered to DHL Airport Terminal in Dhaka
• Risk transferred after handover to DHL
• Buyer arranged air freight via UPS, handled German customs

🟢 Result: Smooth export clearance, fast delivery
🔴 Problem: Buyer faced delay in German customs due to missing HS code on invoice

Option 2: DDP (Delivered Duty Paid)

• Seller arranged all shipping + customs duties + local delivery via FedEx Europe

🟢 Result: Hassle-free delivery for buyer
🔴 Problem: Seller paid unexpectedly high VAT and storage in Germany

🧠 Tips for Choosing Incoterms for Air Freight

Tip	Why it matters
✅ Use FCA, CPT, CIP for cost-sharing clarity	Buyer and seller responsibilities are balanced
❌ Avoid FOB, CIF	They don’t apply to air transport
✅ Use CIP for valuable shipments	Ensures insurance coverage by the seller
✅ Use DDP only if you know the import country's law	Hidden customs costs can surprise the seller
📑 Always mention Incoterm in sales contract and invoice	Avoids future disputes and delays

📘 Final Words: Incoterms Make or Break Air Cargo Deals

In 2025, global air freight remains fast but costly. Whether you're exporting raw materials from Asia or importing tech from Europe, choosing the right Incoterm saves time, money, and legal trouble.

Your best bets for air cargo:
✅ FCA – For experienced buyers
✅ CPT/CIP – For shared control
✅ DDP – For end-to-end seller responsibility

---

Suggested reading:

• Understanding CPT vs. CIP for Air Freight
• Incoterms 2020: What Every Exporter Should Know
• Download Incoterms 2020 from ICC

Learn more about Incoterms and their impact on global shipping on our homepage

Tweet

Incoterms 2020 Explained: Your Easy Guide to International Trade Terms

If you’re new to international trade or even just looking to brush up on your shipping knowledge, you’ve probably heard about Incoterms. But what exactly are Incoterms 2020, and why do they matter for your business? In this easy guide, we’ll break down everything you need to know about these essential shipping terms and how they help buyers and sellers worldwide.

What Are Incoterms?

Simply put, Incoterms are a set of international rules that explain the responsibilities of buyers and sellers during the shipment of goods. Created by the International Chamber of Commerce (ICC), these international trade terms define who pays for shipping, who handles insurance, and at what point the risk transfers from seller to buyer.

Think of Incoterms as a universal language that clears up confusion in global trade — so your shipments go smoothly and without surprises.

Why Are Incoterms 2020 Important?

The latest version, Incoterms 2020, came into effect in January 2020 and brought some important updates to make international shipping even clearer. Whether you’re an importer, exporter, or freight forwarder, understanding these rules is key to avoiding costly mistakes.

Some highlights include:

• DPU (Delivered at Place Unloaded) replaced the old DAT (Delivered at Terminal) term, making it clear delivery can happen anywhere, not just a terminal.
• Sellers now have new responsibilities under FCA (Free Carrier) when it comes to documents like bills of lading, especially useful for shipments using letters of credit.
• Increased insurance requirements under CIP (Carriage and Insurance Paid To) to better protect buyers.
• Clearer rules on security obligations during transport and customs clearance.

Common Incoterms You Should Know

Here are a few of the most common Incoterms you’ll see in contracts:

• EXW (Ex Works): The seller makes the goods available, and the buyer handles the rest, including shipping and customs.
• FOB (Free On Board): The seller loads the goods onto the ship, and the buyer takes over from there.
• CIF (Cost, Insurance, and Freight): The seller pays for shipping and insurance to the port of destination.
• DAP (Delivered At Place): The seller delivers the goods to the buyer’s location, but unloading is the buyer’s responsibility.
• DDP (Delivered Duty Paid): The seller takes care of everything — shipping, duties, and unloading.

How to Choose the Right Incoterm for Your Shipment

Choosing the right Incoterms depends on your specific trade needs:

• What kind of transportation will you use? (Sea, air, road, or multimodal)
• Who will handle customs and insurance?
• How much control or risk are you comfortable taking on?

Final Tips: Mastering Incoterms for Smooth Shipping

Mastering Incoterms 2020 will help you avoid misunderstandings and keep your international shipments on track. Always specify the exact Incoterm in your sales agreements — and if you’re unsure, consult with your logistics provider or trade expert.

Tweet