Selecting the correct Incoterm can mean the difference between smooth international operations and logistical and financial headaches. Although Incoterms 2020 are designed to standardize the responsibilities of buyers and sellers, misuse is still a common problem in foreign trade. In this article we share specific tips for choosing the right Incoterm and common mistakes to avoid.

Why does it matter so much to choose the right Incoterm?

An Incoterm defines who bears the costs, risks and formalities at each stage of international transport. It is not just a contractual clause: it directly affects operations, documentation, insurance and even the relationship with suppliers or customers. Using the wrong Incoterm can generate:

• Unnecessary delays at customs.
• Unexpected costs.
• Loss of control of the load.
• Conflicts due to contractual misunderstandings.

Criteria for choosing an Incoterm carefully

When selecting the appropriate Incoterm, the following aspects should be considered:

1. Mode of transport

Some Incoterms apply exclusively to sea transport (such as FOB, CFR, CIF). If the operation includes inland transport or multimodal, terms such as FCA, CPT, CIP or DAP should be used.

2. Desired control of the goods

The seller may want to maintain logistical control until destination or prefer to transfer it as soon as possible. The same applies to the buyer. Incoterms such as EXW and DDP represent the extremes in terms of responsibilities.

3. Commercial customs

In stable business relationships, the parties may have established certain habits. However, this should not replace an objective analysis, especially if there are changes in product, market or logistical conditions.

4. Type of product and urgency

Perishable, sensitive or expensive products often require greater control, insurance and traceability. In these cases, terms such as CIP may provide more adequate coverage.

5. Logistical experience of the parties

Negotiating with a company that has its own international logistics department is not the same as negotiating with an SME that is just starting to export. Incoterms must also be adapted to the operational capacity of each party.

Common mistakes to avoid

1. Using FOB for non-sea shipments

FOB is still used in multimodal operations, although it should only be applied to cargo that is shipped directly by vessel. For containerized or inland shipments, FCA is the safer alternative.

2. Confusing the delivery point with the final destination

In terms such as DAP or DDP, it is essential to clearly detail the agreed location (e.g. “DAP – Customer’s warehouse, Zaragoza, Spain”) to avoid logistical confusion.

3. Overlooking compulsory insurance in CIP/CIF

These Incoterms require the seller to carry insurance, but many omit it or carry it below the minimum recommended level.

4. Failing to update the use of old Incoterms

Although they are still legally in force, using older versions such as Incoterms 2000 can lead to legal uncertainty and lack of clarity in the event of disputes.

For example, when analyzing which Incoterm best fits a combined land-sea transit operation, it may be useful to visualize graphically the responsibilities of each party. Today there are online calculators, such as this one, that allow you to do this in seconds and at no cost.

Expert advice on Incoterms and international logistics

Choosing an Incoterm should not be a mechanical exercise or left to chance. Investing a few minutes in understanding the differences and applying the most appropriate term can save time, money and trouble. A well-defined transaction from the start is the foundation of successful international trade. In Logisber we know it well: we accompany our customers in every step of the logistics process, helping them to make strategic decisions like this with knowledge, experience and global vision. If you need personalized advice for your international operations, contact us. We will help you find the most suitable solution for your business.