Incoterms® 2020 are eleven rules from the International Chamber of Commerce (ICC) that set, in an international sale, where delivery happens, when risk passes, who pays which logistics leg, and who clears customs. They do not replace the contract, do not set the price of the goods, and are not the domestic Mexico–US truck rate. This guide is an educational paraphrase for ops and AP on the corridor.
- Incoterms® 2020 edition
- 11 rules
- any-mode vs sea-only
- 7 + 4
- named in the contract
- 1 place
Short answer: what they solve (and what they do not)
They solve the delivery point, transfer of risk, allocation of carriage/insurance costs tied to that rule, and — in most cases — who handles export and import. They do not solve goods price, payment terms, transfer of title, product-quality claims, or the local carrier rate.
- An Incoterm without a named place or port is incomplete (e.g. “DAP” alone is not enough; “DAP Laredo TX, warehouse X” orients the file).
- Always state the edition: Incoterms® 2020 (DAT no longer exists; it became DPU).
- Road freight, demurrage, layover, and deadfreight live in accessorials / the contract of carriage — not “inside” the Incoterm.
The 11 rules: any-mode vs sea-only
Operational classification (does not replace the ICC publication). Child detail in each glossary entry:
CPT
Mode: Any
One-line idea: Seller pays freight to destination; risk at origin
Detail: —
CIP
Mode: Any
One-line idea: Like CPT + broader insurance for the buyer
Detail: —
DPU
Mode: Any
One-line idea: Delivered unloaded (ex DAT); import on buyer
Detail: —
FAS
Mode: Sea only
One-line idea: Alongside the vessel at port of shipment
Detail: —
CFR
Mode: Sea only
One-line idea: Seller pays ocean freight; risk on board at origin
Detail: —
Typical ocean transport document: bill of lading (B/L). Physical dock receipt: POD.
Risk, freight, and customs matrix
Compact view of the rules most used on the corridor. “Risk” = typical transfer point under the rule; confirm nuances in the ICC publication and your contract.
EXW
Risk typically passes: At origin (available)
Main freight: Buyer
Export: Buyer
Import: Buyer
FCA
Risk typically passes: To carrier at origin
Main freight: Buyer
Export: Seller
Import: Buyer
FOB
Risk typically passes: On board (shipment)
Main freight: Buyer
Export: Seller
Import: Buyer
CIF
Risk typically passes: On board (shipment)
Main freight: Seller (to dest. port)
Export: Seller
Import: Buyer
DAP
Risk typically passes: At destination (not unloaded)
Main freight: Seller
Export: Seller
Import: Buyer
DDP
Risk typically passes: At destination (not unloaded)
Main freight: Seller
Export: Seller
Import: Seller
Practical use on the Mexico–US corridor
Real mode wins. On border trailer / multimodal, sea-only rules create claims friction over who “delivered”:
Pickup at MX plant, buyer controls the lane
Typical rule: FCA (sometimes EXW)
Ops watch-out: If the seller loads, prefer FCA over EXW
Delivery to US/MX warehouse without seller import clearance
Typical rule: DAP / DPU
Ops watch-out: Name the exact address; agree unloading
Seller assumes import and “duty-paid” delivery
Typical rule: DDP
Ops watch-out: Taxes, permits, and importer of record capacity
Ocean import Asia to Manzanillo / Lázaro
Typical rule: FOB / CIF / CFR
Ops watch-out: Named port; B/L in the file
Container handed at terminal (not on board)
Typical rule: FCA (not FOB)
Ops watch-out: Classic inherited-template mistake
After the Incoterm, the road leg still needs trip evidence: POD convention and, in Mexico, freight tax layers (CFDI + Carta Porte) that are distinct from the commercial rule.
Expensive quoting mistakes
- FOB / CIF on border truck — wrong mode; “who delivered” fights with no on-board point.
- EXW + seller who loads “as a favor” — loading risk without a clear rule; prefer FCA.
- Incoterm with no named place or edition — “DAP Mexico” does not fix the dock or the rules version.
- Confusing Incoterm with rate — detention, layover, demurrage, and deadfreight audit as accessorials, not as a vague “Incoterm breach.”
- Templates still saying DAT — obsolete since 2020; use DPU.
- DDP without import capacity — the seller owns clearances and taxes; if they cannot, the lane breaks at the border.
Checklist before you lock the Incoterm
Before you freeze price and PO, close these points:
Elige un paso para ver el detalle
Detalle del paso · 01
Real lane mode
From Incoterm to shipment file
The Incoterm lives in the sale contract; the shipment file proves the trip met the agreed point. Short flow:
Shipment file
From rule to trip ID
Choose
Rule + mode
Name
Exact place
Contract
PO and rate
Evidence
POD or B/L
Audit
Before pay
Where OCL fits (not legal advice)
OCL is an autonomous TMS with agents (computer use): it does not choose or interpret Incoterms® as legal counsel, and it is What it does is bind the declared Incoterm to the shipment file — rate, CFDI/Carta Porte when applicable, GPS, and POD — and flag inconsistencies (mode vs rule, place vs evidence) before pay. Your team close the contractual judgment.
If you already run another system of record, the pattern is coexist: the agent closes the file work; your master-data stack stays where it is.
Key takeaways6 points
- Incoterms® 2020 (ICC) = 11 rules on delivery, risk, logistics costs, and clearances — not goods price or title transfer.
- Seven any-mode rules and four sea / inland-waterway-only rules.
- C-group: paying freight to destination ≠ risk traveling to destination.
- On MX–US truck: avoid FOB/CIF; prioritize FCA, DAP, or DDP depending on who clears customs.
- The Incoterm does not define accessorials, detention, or deadfreight — that is rate / carriage contract.
- Bind it to the shipment file (named place + 2020 edition + POD/BL) before fighting charges.
Is your Incoterm on the PO… or also in the shipment file?
Child terms and related reading
- EXW · FCA · FOB · CIF · DAP · DDP
- Bill of lading (B/L)
- POD · POD convention for shippers
- Freight accessorials (shippers / 3PLs)
- Mexico freight tax (CFDI + Carta Porte)
Official source: International Chamber of Commerce (ICC) — Incoterms® 2020 publication. This page is an educational paraphrase.
Frequently asked questions
Eleven rules from the International Chamber of Commerce (ICC) that define delivery, transfer of risk, allocation of logistics costs, and who handles customs clearances in an international sale. They do not replace the contract or set the price of the goods.
Only up to the agreed place of delivery. Local road legs, accessorials, detention, and deadfreight are defined by the contract of carriage / rate — not by the Incoterm alone.
FOB, FAS, CFR, and CIF are sea / inland waterway only. For multimodal or cross-border truck, prefer FCA, CPT/CIP, DAP, DPU, or DDP. Using FOB when a container is handed over at a terminal is a classic mistake; practice points to FCA.
For road and multimodal: DAP and DDP (and often FCA). For ocean imports Asia–Mexico: FOB and CIF remain heavily searched. Choose by real mode, not by quoting habit.
No. In Incoterms® 2020, DAT was renamed DPU (delivered at place unloaded). Update contracts and templates.
No. OCL helps bind the declared Incoterm to the shipment file (rate, CFDI/Carta Porte, GPS/POD) and flag inconsistencies before pay. Contract wording is yours with your counsel.