1. What Incoterms regulate and what they leave open
Incoterms® rules are published by the International Chamber of Commerce (ICC). The current edition, Incoterms® 2020, has been in force since 1 January 2020 and contains 11 rules. Between seller and buyer, each rule allocates three things: who arranges and pays for which part of the transport, where the goods count as delivered, and at which point the risk of loss or damage transfers. Each rule also assigns export and import clearance, and two rules add a minimum insurance obligation.
Just as important is what the rules do not settle. Transfer of ownership, the price and payment terms, remedies for breach of contract, and the contract of carriage with the transport provider all remain matters for the sales contract and the transport contract. An Incoterms rule is one clause within a commercial agreement, not a substitute for it.
2. The 11 rules of Incoterms 2020 at a glance
Seven rules work for any mode of transport, including multimodal moves. Four rules are written for sea and inland-waterway transport only, because delivery happens alongside or on board a vessel.
| Rule | Name | Mode | Delivery and risk transfer, in short |
|---|---|---|---|
| EXW | Ex Works | Any mode | Goods are placed at the buyer’s disposal at the seller’s premises, not loaded. The buyer carries almost every obligation. |
| FCA | Free Carrier | Any mode | Goods are handed to the carrier nominated by the buyer at the named place; loaded when that place is the seller’s premises. |
| CPT | Carriage Paid To | Any mode | Risk passes when goods reach the first carrier; the seller pays carriage to the named destination. |
| CIP | Carriage and Insurance Paid To | Any mode | Like CPT, plus the seller must insure the goods, by default at all-risks level (Institute Cargo Clauses A). |
| DAP | Delivered at Place | Any mode | The seller delivers at the named destination, ready for unloading by the buyer. |
| DPU | Delivered at Place Unloaded | Any mode | The seller delivers and unloads at the named destination, the only rule that obliges the seller to unload. |
| DDP | Delivered Duty Paid | Any mode | The seller delivers import-cleared at destination and bears duties and taxes in the buyer’s country. |
| FAS | Free Alongside Ship | Sea / inland waterway | Goods are delivered alongside the vessel at the port of shipment. |
| FOB | Free on Board | Sea / inland waterway | Goods are delivered on board the vessel at the port of shipment. |
| CFR | Cost and Freight | Sea / inland waterway | Risk passes on board at the shipment port; the seller pays freight to the destination port. |
| CIF | Cost, Insurance and Freight | Sea / inland waterway | Like CFR, plus the seller must insure, by default at minimum cover (Institute Cargo Clauses C). |
Two details cause most misreadings in practice. First, the C-rules split cost and risk: under CPT, CIP, CFR, and CIF the seller pays transport to the destination, but the risk has already passed at the start of the main carriage. A quote against a C-rule is not “seller’s risk until arrival”. Second, DPU is the 2020 successor of DAT (Delivered at Terminal); documents that still show DAT refer to the 2010 edition.
3. Choosing a rule for a spot shipment
For a single spot shipment the question is rarely academic: the rule determines which legs you are asking suppliers to price at all. Work through four checks:
- Who controls the main carriage? Under EXW, FCA, FAS, and FOB the buyer buys the transport; under the C- and D-rules the seller does. Request spot quotes for the legs your side is responsible for. Paying for a leg the other party controls weakens both price and visibility.
- Where exactly is the handover? Choose a named place precise enough to price: a warehouse address, a terminal, a port. “FCA Germany” is not a handover point.
- Who can realistically clear customs? EXW leaves export formalities to the buyer, which is often impractical in the seller’s country; DDP makes the seller responsible for import clearance, duties, and taxes abroad. Both extremes deserve a deliberate decision rather than habit.
- Is insurance covered? Only CIP and CIF oblige a party to insure, and at different default levels. Under every other rule, whoever bears the risk decides on cargo insurance separately.
Whatever you choose, use the same rule for every invited supplier on the same shipment. Quotes priced against different responsibility splits cannot be compared line by line.
4. How Incoterms appear in a Spoterix Spot Request
When you create a Spot Request, the Incoterm field sits in the Schedule step next to the quote deadline and transport dates. It is a required dropdown: a request cannot be sent without a term, so no supplier has to guess the responsibility split.
The dropdown stays disabled until you select the transport mode and shows “Select transport mode first.” Once a mode is set, Spoterix offers only the rules that fit it:
| Transport mode | Incoterms offered |
|---|---|
| Air | EXW, FCA, CPT, CIP, DAP, DPU, DDP |
| Road | EXW, FCA, CPT, CIP, DAP, DPU, DDP |
| Ocean | EXW, FCA, CPT, CIP, DAP, DPU, DDP, FAS, FOB, CFR, CIF |
| Open (supplier decides) | All 11 rules, because the supplier may propose a sea routing |
The filter follows the ICC grouping: the four sea and inland-waterway rules appear only when the request is for ocean freight or leaves the mode open. If you change the transport mode after selecting a term, Spoterix clears a selection that no longer fits: switch an ocean request with FOB to air, and the field returns to empty so you consciously pick a valid rule instead of sending an air shipment “free on board”.
Every invited supplier contact then sees the same code in the request details and in the quote view they price against. Combined with one currency and one charge structure, this keeps the incoming quotes on a single commercial basis. If you prefill the request from an uploaded document, Spoterix can suggest a term from the same list; check the suggestion against the source document like any other extracted value.
5. Limitations and references
- Incoterms rules allocate tasks, costs, and risks between seller and buyer. They do not set freight rates, transfer ownership, or replace the sales or carriage contract.
- Spoterix does not verify the selected rule against your sales contract; responsibility for choosing the correct term remains with the requesting organization.
- This guide is general information, not legal advice. For cross-border specifics (customs regimes, tax consequences of DDP, or insurance wording), involve your trade-compliance or legal counsel.