Shadowing Practice: Incoterms 2020 Explained [Complete Guide] - Learn English Speaking with Video
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Hi, in this video, we'll take a look at Incoterms 2020, what they mean, their application, and the benefits of using them.
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So, make sure to watch the full video if you are new exporters.
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We've got a lot to cover in today's video, so let's get started.
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So, what are Incoterms, and who made them?
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Incoterms are referred to as International Commercial Terms.
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Incoterms defines the risk and responsibility of a shipment between the buyer and the seller.
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Incoterms were developed by the International Chambers of Commerce.
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So why do we use Incoterms?
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Incoterms holds a universal meaning around the world.
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People use Incoterms to avoid misunderstandings in foreign trade contracts by clarifying the tasks, costs and risks.
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How to use Incoterms?
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If parties want Incoterm 2020 rules to apply to their contract, the safest way is to clearly mention it in the contract.
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For example, CIF, Hong Kong Incoterms 2020.
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ICC grouped the Incoterms 2020 into two categories.
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Number 1, rules for any modes of transport.
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And number 2, rules for sea and inland waterways transport.
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In the first group, we have 7 Incoterms.
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We have created an easy to understand chart that displays Incoterms 2020.
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The left side of the chart displays the different types of Incoterms beginning from top to bottom.
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The top side of the chart displays the different obligations
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and charges and displays which are covered by the seller and which are covered by the buyer.
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The blue points to the sellers and the yellow points to the buyer.
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So, let's start at the first Incoterm, EXW, which means X -Works or X -Warehouse.
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In X -Works, the seller is only responsible for ensuring
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that the cargo is packaged so it is ready for export and the goods can be collected from their location.
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The risk or liability for the goods transfers to the buyer when the goods are made available at the agreed -upon place.
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The buyer bears all risks and costs once they collect the goods from the seller's location.
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By applying this rule, the buyer and the seller do not have to make an insurance contract.
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Now it's time for Incoterm number 2, FCA, which means free carrier.
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In FCA, the seller is responsible for the export clearance
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and the delivery of goods to the carrier at the named
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place of delivery the incoterms 2020 fca has two possible delivery locations number one
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if the place of delivery is at the seller's premises the seller must load the goods number two
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if the delivery takes place in a different location the seller is not responsible for unloading
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when the goods have been delivered by the seller to the
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selected location the risk transfers to the buyer the buyer is responsible for paying the price of goods and all
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that transportation fees from the seller's place to the buyer's selected
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place in fca it becomes the buyer's responsibility to determine if they would like to obtain an insurance policy
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moving right along to incoterm number three cpt cpt also known
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as carriage paid two in a cpt incoterm the seller is responsible for clearing the goods for export
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and delivering the goods to the name place of destination with
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the transportation fees the risk is transferred from the seller to
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the buyer as soon as the goods are delivered to the first carrier even if there are multiple transportations.
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The buyer is only responsible for import requirements and local delivery and unloading charges.
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The seller is not responsible for any damages
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if the buyer has not insured the products because the goods have already been transferred to the first carrier.
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Without further ado, let's start things off with Incoterm number 4, CIP.
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The CIP stands for carriage and insurance paid to.
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In CIP, the seller is responsible for delivering the goods to the destination, the cost of international freight, as well as insurance fees and charges.
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CIP is also very similar to CPT.
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Except that with CIP, the seller is also responsible for arranging main carriage insurance
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and let's dive right into Incoterm number five DAP.
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The DAP means delivered at place.
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Under the DAP, the seller is responsible for all costs
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and risks associated with the delivery of the goods to the final destination, usually the buyer's premises.
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The risk transfers from seller to buyer when the goods are available for unloading.
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The buyer is then responsible for unloading the goods at the end destination.
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In DAP, both parties are not obligated to make a contract of insurance, but it is recommended.
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With that, it's time for our sixth Incoterm, DPU.
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DPU stands for Delivered at Place Unloaded.
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In DPU, the seller is responsible for all costs and risks until the goods are delivered to named destination place,
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which is usually close to the buyer.
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DPU is the only Incoterm's rule that requires the seller to unload goods at the place of destination.
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The risk transfers from seller to buyer at the place of unloading.
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The buyer is responsible for import clearance procedures, and both parties are not obligated to obtain an insurance policy, but it is recommended.
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Moving right along to Incoterm number 7, DDP, which means delivery duty paid.
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As per the shipping terms under DDP, the seller bears all costs and risks involved in delivering the goods to the selected place.
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It is also the only term where the seller is liable for import custom fees.
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The risk transfers from the seller to buyer at the place of unloading.
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The buyer is then responsible for unloading the goods at the end destination.
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There is no obligation to insure the goods.
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The seller is not obligated to insure the goods for pre -carriage or main carriage.
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With that, we have completed our first category of Incoterms, and now, it's time for Category 2, Rules for Sea and Inland Waterways Transport.
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Our first Incoterm is FAS.
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FAS stands for Free Alongside Ship.
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In FAS, the seller is liable and responsible for all the procedures in their country, up until the goods are alongside the ship or the terminal warehouse.
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FAS indicates that the risk transfers to the buyer when the goods are placed alongside the ship.
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The buyer is responsible for loading the freight onto the vessel as well as handling selling local carriage, discharge, import formalities and duties,
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and onward carriage to the final destination.
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Insurance is not a stipulated requirement under FAS, however, it is a common practice for both buyer
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and seller to get insurance coverage of the cargo's journey they are each responsible for.
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Now it's time for Incoterm number 2, FOB.
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FOB is also known as free on board.
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In FOB, the seller clears the goods for export and ensures
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that they are delivered to and loaded onto the vessel for transport at the named port of departure.
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The risk transfers from the seller to the buyer
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when the goods are onboard the vessel and the buyer bears costs from that point forward.
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The buyer arranges all the other stages to the cargo's ultimate destination.
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Insurance coverage isn't mandatory under the FOB Incoterm.
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However, it is common practice to obtain insurance.
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This may be done by the buyer, seller, or both to cover the entire ocean freight journey or their respective responsibilities.
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With that, it's time for our third incoterm, CFR.
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CFR stands for Cost and Freight.
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The CFR incoterm is an incoterm that is exclusive to ocean freight shipping.
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In CFR, the seller is not only responsible for delivering the goods to the port specified by the buyer
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but also bears the transportation costs of the goods to the destination port.
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The risk passes from seller to buyer when the seller delivers the goods on board the ship.
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The buyer is responsible for paying all the additional transport fees from the port of destination including import clearance and duties.
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The seller is not responsible for procuring marine insurance against the risk of loss or damage to the cargo during transit it.
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And now it's time for our last incoterm, CIF, that stands for Cost,
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Insurance and Freight Agreement, with the seller holding responsible for all three.
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In CIF terms, the seller clears the goods at origin, places the cargo on board, and pays for insurance until the port of discharge at the minimum coverage.
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The risk is transferred to the buyer at the time the goods are on board.
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board the vessel for the main carriage.
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However, they don't take on any costs until the freight arrives at the named port of destination.
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In CIF, the seller is obligated to take out the minimum level of insurance coverage for the buyer's risk.
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We have completed all incoterms, now you can decide which one is the best for you.
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I get a lot of questions from the new exporters, like, for example, which incoterm is the best for new exporters?
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Well, there is no best incoterm, it all depends on the requirements of the buyer and the seller.
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In my opinion, these are some of the best incoterms for new exporters, FOB, CFR, and FCA.
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If you learned something new from today's video, make sure to subscribe to our YouTube channel right now.
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Just click on the button below this video.
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And if you want exclusive import -export training that I only share with subscribers,
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Head over to USAXMClub .com that is USAXMClub .com and sign up for our newsletter.
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It's free.
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Now, I want to turn it over to you.
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Which and co -term from this video are you going to use?
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Let me know by leaving a comment below right now.
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Thanks and good day.
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Vocabulary and speaking notes for this lesson
This speaking lesson is built on the video “Incoterms 2020 Explained”. The speaker keeps coming back to these words: incoterm, seller, buyer, responsible, risk. This video has 119 sentences and 1598 words to shadow. The speech runs for 11:06. The speaker talks at a steady 144 words per minute, a comfortable pace for shadowing. Only 77% of the words are among the 3,000 most common in English, so the vocabulary is demanding.
Key vocabulary in this video
15 words from the video worth learning, with pronunciation and meaning:
| Word | Pronunciation | Meaning |
|---|---|---|
| cellar noun | /ˈsɛləɹ/ | An enclosed underground space, often under a building, used for storage or shelter. |
| buyer noun | /ˈbaɪ.əɹ/ | A person who makes one or more purchases. |
| destination noun | /dɛstɪˈneɪʃən/ | The place set for the end of a journey or to which something is sent; place or point aimed at. |
| carriage noun | /ˈkæɹɪd͡ʒ/ | The act of conveying; carrying. |
| freight noun | /fɹeɪt/ | The transportation of goods (originally by water; now also (chiefly US) by land); also, the hiring of a vehicle or vessel for such transportation. |
| import noun | /ˈɪm.pɔɹt/ | Something brought in from an exterior source, especially for sale or trade. |
| export noun | /ˈɛks.pɔɹt/ | Something that is exported. |
| carrier noun | /ˈkæɹi.ɚ/ | A person or object that carries someone or something else. |
| vessel noun | /ˈvɛsəl/ | Any craft designed for transportation on or in water, such as a ship, boat, or submarine. |
| chart noun | /t͡ʃɑɹt/ | A map illustrating the geography of a specific phenomenon. |
| alongside | /əˌlɔŋˈsaɪd/ | Side by side with. |
| select verb | /sɪˈlɛkt/ | To choose one or more elements of a set, especially a set of options. |
| obtain verb | /əbˈteɪn/ | To get hold of; to gain possession of, to procure; to acquire, in any way. |
| requirement noun | /ɹɪˈkwaɪɹmənt/ | A necessity or prerequisite; something required or obligatory. Its adpositions are generally of in relation to who or what has given it, on in relation to whom… |
| cargo noun | /ˈkɑɹɡoʊ/ | Freight carried by a ship, aircraft, or motor vehicle. |
Phrasal verbs you will hear
| Word | Meaning |
|---|---|
| take out verb | To remove. |
Grammar in this video
The structures the speaker uses most, with the exact words from the video:
| Structure | In the video |
|---|---|
| Passive voice be + past participle — the focus is on what happens, not who does it | are referred · were developed · are covered |
| Present perfect have/has + past participle — a past action that still matters now | have created · have been delivered · has not insured |
| Relative clauses who / which + clause — extra information about a person or thing | displays which are · EXW, which means · FCA, which means |
Pronunciation to watch
The speaker uses 4 contractions and reduced forms, such as don't, isn't, we'll. Say them the short way, as you hear them.
- The “sh” and “zh” sounds: destination /dɛstɪˈneɪʃən/, obligation /ˌɑ.blɪˈɡeɪ.ʃn̩/, associate /əˈsoʊʃi.ət/, shipment /ˈʃɪpmənt/, insure /ɪnˈʃʊɚ/
- Long words — get the stress right: destination /dɛstɪˈneɪʃən/, universal /ˌjunəˈvɜɹs(ə)l/, associate /əˈsoʊʃi.ət/, liability /laɪəˈbɪlɪti/, mandatory /ˈmæn.dəˌtɔɹ.i/
How to practise with this video
- Listen to the whole video once without speaking and note the words you do not know.
- Shadow it sentence by sentence at normal speed, repeating each one until your rhythm matches the speaker.
- Record yourself and compare with the original, paying attention to words like cellar, buyer, destination.
What is the Shadowing Technique?
Shadowing is a science-backed language learning technique originally developed for professional interpreter training and popularized by polyglot Dr. Alexander Arguelles. The method is simple but powerful: you listen to native English audio and immediately repeat it out loud — like a shadow following the speaker with just a 1–2 second delay. Unlike passive listening or grammar drills, shadowing forces your brain and mouth muscles to simultaneously process and reproduce real speech patterns. Research shows it significantly improves pronunciation accuracy, intonation, rhythm, connected speech, listening comprehension, and speaking fluency — making it one of the most effective methods for IELTS Speaking preparation and real-world English communication.