 |
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