The Ultimate Guide to Incoterms 2020

Incoterms help define where delivery happens, where risk transfers, and which party handles specific logistics tasks. They do not replace a full contract, but they reduce ambiguity in routine trade execution.

• EXW offers maximum buyer control but requires stronger origin coordination.
• FOB is often preferred when buyers want the supplier to handle export-side movement up to vessel loading.
• These terms are useful when the buyer already has freight and forwarding control.

• CIF can simplify ocean shipment procurement but still requires careful review of freight assumptions.
• DAP can work when buyers want more door-side coordination without owning every logistics step.
• These terms can be convenient, but buyers should confirm what is and is not included.

• Using an Incoterm without matching it to the transport mode.
• Assuming customs duties are included when they are not.
• Failing to clarify insurance expectations.
• Treating the term as a substitute for packaging, quality, or payment clauses.

Choose the term based on control, internal logistics capability, and dispute prevention. The best Incoterm is not always the most familiar one; it is the one that matches how the shipment will actually be executed.