Incoterms FAQ for Beginners

Incoterms allocate delivery, risk transfer, and cost buckets between buyer and seller. Which beginner question applies?

1. Which rule for minimal seller logistics → EXW or FCA at seller's premises shifts main carriage to buyer — confirm buyer can export-book.
2. Which rule for port handoff → FOB/CFR/CIF name a port; seller delivers through loading (FOB) or adds freight/insurance (C/D terms).
3. Commonly confused with payment method → Incoterms do not guarantee payment; pair with L/C, prepay, or open account explicitly.
4. Verify before quoting → write Incoterm + named place/port on every PI and RFQ line to avoid mixed baselines.

• First-time import of this product category
• New supplier or Incoterms change
• Bank or buyer requests additional proof documents

### Electronics exporter compliance review A Shenzhen electronics firm shipping to Germany faced new documentation requirements.

**Outcome:** Updated commercial invoice fields before customs entry; avoided port hold.

**Lesson:** Align invoice data with latest customs pre-declaration fields before shipment.

### Buyer email negotiation on payment terms An importer requested 30-day open account; seller proposed confirmed L/C instead.

**Outcome:** Both parties agreed on 60-day usance L/C with third-party inspection clause.

**Lesson:** Use email templates to document payment term changes before production starts.

Incoterms FAQ for Beginners is a core concept importers and exporters must understand for compliant cross-border trade.

Complete an internal document review before shipment to avoid port holds.

1. Rewrite your last PI to include Incoterm, named place/port, and a one-line note on who books main carriage.
2. Compare two candidate Incoterms on cost and risk using the same product and port names.
3. Ask your freight forwarder which term they can execute for the buyer's destination route.
4. Open the Incoterms FAQ on Trade31 to match your deal pattern to the right rule set.