Key points
- Seven rules for any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP.
- Four rules for sea and inland waterway transport only: FAS, FOB, CFR and CIF.
- Main changes in 2020: DPU replaces DAT; CIP now requires a higher level of insurance cover by default (Institute Cargo Clauses (A)), while CIF keeps the minimum cover; under FCA the parties can agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller; and under FCA, DAP, DPU and DDP the buyer or seller may use its own means of transport.
In practice
The chosen rule directly shapes how prices are built up and who handles which documents. A CIF price must include freight and insurance, with the seller booking and insuring; under FOB the buyer nominates the shipping line and the seller works with the buyer’s forwarder. The rule also affects the customs value, the tax base for export tax refunds, who claims for damage after risk has passed, and which documents a letter of credit calls for.
Common mistakes include sticking with FOB and CIF for container shipments, sellers agreeing to DDP without assessing import taxes and clearance capability in the destination country, and contracts, letters of credit and invoices that cite different rules. The rule and place should be fixed when the contract is signed, and then drive quotation, logistics and documentation automatically.
How Tranexio supports it
Tranexio records the Incoterms rule and place of delivery on international contracts and uses them as the basis for price build-up, logistics arrangements, document preparation and allocation of charges; DDP business can be tracked through to delivery at destination. See Contracts and orders and Logistics and documents.