Incoterms® 2020 are the International Chamber of Commerce’s standard trade terms. The one written on your purchase order decides which costs the European supplier pays, which costs you pay, and at what point the risk of loss or damage moves from seller to buyer.
EXW — Ex Works
The supplier makes the goods available at its premises. You arrange and pay for everything from there: loading, export clearance, freight, insurance and import clearance. EXW gives you the most control over the freight cost, but in practice an EU export declaration must be filed, so agree with the supplier who handles it.
FCA and FOB
Under FCA the supplier clears the goods for export and hands them to your carrier at an agreed place. FOB is similar but applies only to sea freight, with risk passing once the goods are on board the vessel. Both let you control the main freight while the supplier handles origin formalities. FCA is usually the better fit for containerised cargo.
CIF and CIP
The supplier pays freight and insurance to the destination port (CIF) or place (CIP), but risk passes to you at origin. Freight cost is bundled into the product price, which makes it harder to see or negotiate.
DAP and DDP
Under DAP the supplier delivers to a named place in Pakistan, and you handle import clearance and duties. DDP puts duties on the seller too, which is rarely practical for imports into Pakistan because the seller would need to act as importer.
A practical rule
If you import regularly, buying FCA or FOB and booking freight with your own forwarder usually gives the best visibility and control of cost. For a first trial order, CIF can be simpler. Either way, make sure the Incoterm, the named place and the version (2020) appear on both the proforma and the commercial invoice.
General guidance only, not legal or customs advice. Regulations change; confirm current requirements for your goods before shipping.
