What is Incoterms?
Incoterms® rules are standard trade terms published by the International Chamber of Commerce (ICC) that allocate tasks, costs and risks between seller and buyer in a contract of sale. The current edition, Incoterms® 2020, contains 11 rules: seven for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP) and four for sea and inland waterway transport only (FAS, FOB, CFR, CIF). Each rule sets out ten paired obligations, A1 to A10 for the seller and B1 to B10 for the buyer, covering delivery, transfer of risk, carriage, insurance, transport documents, export and import clearance and allocation of costs. The 2020 edition renamed DAT as DPU, allowed FCA parties to agree that the buyer will instruct its carrier to issue an on-board bill of lading to the seller, raised CIP insurance to Institute Cargo Clauses (A) while leaving CIF at clauses (C), and gathered all costs in articles A9 and B9. The rules apply only when incorporated into the contract, ideally in the form "FCA [named place] Incoterms® 2020".
Why it matters for forwarders
Incoterms do not govern transfer of title, payment or the contract of carriage, yet forwarders are routinely asked to quote, book and invoice by them, so misreading a term produces disputes over origin and destination charges. The named place matters as much as the three letters: "FCA Shanghai" without a precise address leaves open whether delivery happens at the seller's premises or at the forwarder's warehouse, which changes who pays loading and pre-carriage. FOB and CIF are still widely used for containers, although risk under those rules passes only when goods are on board, after the seller has handed the box to the terminal; ICC guidance points to FCA, CPT or CIP in such cases. DDP makes the seller responsible for import clearance and duties in the buyer's country, which may be impractical for a foreign seller that cannot act as importer. Check that the term on the commercial invoice, the booking and any letter of credit is the same, because inconsistencies are a frequent source of charge disputes.