Incoterms and Packaging: Who Pays and Who Carries the Risk

Published 26 October 2026 · By Ranjeet Kumar, Proprietor, Solution Enterprises

Short answer: under all eleven Incoterms 2020 rules, from EXW to DDP, the seller must package the goods at its own cost, in a manner appropriate for their transport, unless the trade normally ships them unpackaged or the parties agreed specific packaging. The buyer has no packaging obligation. What changes between the rules is where risk passes, and that decides who is out of pocket when poor packing lets goods arrive damaged.

Most Incoterms charts give you a row that says “export packaging: seller” and move on. That row answers the easy question. Three questions sit underneath it.

Question 1: who pays for packaging?

The seller. Article A8 in each rule says the seller must, at its own cost, package the goods, and must package and mark them in the manner appropriate for their transport. B8 says the buyer has no obligation to the seller. So packaging is part of the seller’s price, not a separate charge, unless the contract says otherwise. Remember that Incoterms only apply when the contract names them, for example “FCA Greater Noida, Incoterms® 2020”.

Question 2: who decides what “appropriate” means?

Packing that suits a two-day truck run will not survive a month in a container through the monsoon. Appropriate packing depends on the route and mode, and under some rules the seller does not control or even know them. Under EXW and FCA the buyer arranges the main carriage. If the seller does not know whether goods will go by road, air or sea, it cannot be sure its packing is appropriate.

The rules give the fix themselves: A8 gives way where the parties have agreed specific packaging or marking. Write it down. A packaging clause in the purchase order, naming the transport mode, pallet type, strapping, edge protection and moisture protection, removes the argument before it starts. Our guide to writing a packaging specification sets out what to include.

Question 3: who carries the loss when packing fails?

Risk passes from seller to buyer at the delivery point in A2/B2 of each rule. Damage that happens after that point is, in principle, the buyer’s risk. But if the damage was caused by packing that was not appropriate for the transport, the buyer may have a claim against the seller for failing its A8 obligation, even though risk had passed. Poor packing can follow the seller down the route.

Insurance adds a second trap. The standard Institute Cargo Clauses (A), the most common “all risks” marine cargo wording, exclude loss caused by insufficient or unsuitable packing or preparation. In the 2009 wording this applies where the packing was done by the insured or its employees, or before the cover began, and packing includes stowage in a container. In plain terms, the policy often will not pay for damage your own packing caused. Read the actual clauses on your policy.

The eleven rules at a glance

Rule	Risk passes	Packaging note
EXW	Goods at buyer’s disposal at seller’s place, not loaded	Seller packs; buyer loads. Agree who loads and who secures
FCA	Handed to buyer’s carrier	At seller’s premises the seller loads; pack for the buyer’s stated mode
FAS	Alongside the ship	Sea and inland waterway only; suits bulk and break-bulk
FOB	On board the ship	Often misused for containers handed over at a terminal
CFR	On board at origin	Seller pays freight, but risk passed at loading
CIF	On board at origin	As CFR, plus insurance arranged by seller
CPT	Handed to first carrier	Seller pays carriage, so knows the route: pack for all of it
CIP	Handed to first carrier	As CPT, plus insurance arranged by seller
DAP	At destination, ready for unloading	Seller carries transit risk; packing failure is its loss
DPU	At destination, unloaded	Seller also unloads; plan packing for that handling
DDP	At destination, import cleared	Seller carries everything to the door

A note on FOB and containers

Many Indian exporters quote FOB out of habit. With containers, the seller usually hands the box to the carrier at a terminal or CFS days before it goes on board, yet under FOB still carries the risk until loading. ICC Academy guidance says FCA is the more suitable rule in that case. For the exporter, that gap is days of handling during which damage from weak packing is still its problem. If you must quote FOB for a letter of credit, pack for the terminal handling as well as the voyage.

Clause checklist for the purchase order

• The Incoterms rule, named place and “Incoterms® 2020”.
• Transport mode and route, if the buyer arranges carriage.
• Pallet type and size, any wood-treatment requirement (see ISPM 15 explained), or paper pallets.
• Strapping material, number and pattern; edge protectors at every strap crossing.
• Moisture protection for sea legs: liners, desiccant, dry dunnage.
• Marking: handling symbols, gross weight, destination marks.
• Who loads, who secures inside the container, and who signs off.

For the wider paperwork list on a first shipment, see the export packaging checklist.

Common questions

Can the buyer be asked to pay for special packaging?

Yes, by agreement. Incoterms set a default; the contract can price heavier or special packing separately. Write it in.

Does EXW mean the seller can skip packing?

No. EXW A8 still requires packaging appropriate for transport. EXW only removes loading, export clearance and carriage from the seller.

Who pays for dunnage and lashing in the container?

Whoever stuffs the container, unless agreed otherwise. If the seller stuffs it, the insurance packing exclusion treats that stowage as packing, so do it properly.

We make the strapping and edge protection that goes into export packing: PET strap, paper angle boards and paper pallets. See the PET strap page or send your packing list through request a quote.

Sources

• International Chamber of Commerce, Incoterms® 2020, rule text for FAS, FOB, CFR and CIF and article-by-article text for all eleven rules (ICC Knowledge 2 Go library) — A8/B8 packaging and marking, A9/B9 costs, A4 carriage.
• ICC Academy, Incoterms 2020: FAS or FOB? — FCA more suitable for containerised goods handed over at a terminal.
• Gowling WLG, Incoterms 2020 help deliver control — risk to exporters using FOB for containers.
• Indian Institute of Banking & Finance, Key changes to Incoterms 2020 — rules apply only when incorporated in the contract.
• Institute Cargo Clauses (A), 1982 wording (published policy copy) and 1/1/2009 wording as reported by i-law — exclusion 4.3 for insufficient or unsuitable packing.

Last verified: 26 October 2026. General information, not legal or insurance advice. Check your contract and policy wording with your lawyer, bank or insurer.