Explain what each Incoterms 2020 rule allocates between buyer and seller for risk, cost and delivery obligations.
Warehousing & Procurement
Choosing Incoterms Rules to Allocate Delivery Risk, Freight Cost and Import Duties
Teaches buyers and logistics professionals to choose, negotiate and audit Incoterms 2020 rules that allocate delivery risk, freight cost, insurance and import duties correctly.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
A single wrong Incoterms choice can leave a buyer holding freight, insurance and customs risk nobody budgeted for, or leave a seller registered for import VAT in a country where it has no local presence. This course works through the Incoterms 2020 rules from first principles: what each rule actually allocates between buyer and seller, where delivery and risk transfer happens, and why a rule written for sea freight, such as FOB or CIF, causes real problems when applied to a containerised or multimodal shipment. Delegates learn to separate risk transfer from title transfer, check that insurance obligations under CIF and CIP are adequate rather than minimal, and confirm the Incoterms rule chosen is consistent with a letter of credit's documentary requirements. A practical costing module builds landed cost calculations and cost allocation tables so delegates can see exactly which party pays freight, insurance, duty and terminal handling under each rule. The course ends on negotiation and governance: making the case to a supplier for moving from EXW to FCA, and setting an internal policy so buyers stop defaulting to whatever Incoterms rule appears on the supplier's invoice. Delegates leave able to choose, negotiate and audit Incoterms use with confidence.
Expected Learning Outcomes
Select the Incoterms rule that matches the transport mode and risk appetite of a specific shipment.
Separate the transfer of risk under Incoterms from the transfer of title under the contract of sale.
Calculate landed cost by allocating freight, insurance, duty and clearance charges according to the rule used.
Identify the importer of record and customs obligations that follow from each Incoterms choice.
Negotiate a change of Incoterms rule with a supplier using a total landed cost argument.
Set an internal policy that standardises Incoterms use across purchase orders and contracts.
Who Should Attend
Buyers and procurement specialists negotiating international purchase contracts.
Logistics and freight coordinators arranging international shipments and customs clearance.
Import and export administrators responsible for customs documentation accuracy.
Supply chain analysts calculating landed cost for sourcing decisions.
Finance staff reviewing freight and duty charges against contracted delivery terms.
Sales and contracts staff negotiating delivery terms with international customers.
Course Modules
Select any module to see its sessions and points.
01The Incoterms 2020 Framework
2 sessions · 8 points
Session 1What Incoterms Rules Do and Do Not Cover
- Explain that Incoterms rules allocate risk, cost and delivery obligations between buyer and seller but do not transfer title or set the price.
- Distinguish the point of delivery, where risk transfers, from the point of destination, which may be a different place entirely.
- Identify the four groups of Incoterms 2020 rules and which rules are restricted to sea and inland waterway transport.
- Read an Incoterms clause on a purchase order or contract and identify the named place that makes it enforceable.
Session 2The Eleven Rules and Their Practical Differences
- Compare EXW and FCA to show why EXW leaves the buyer responsible for export clearance and loading risk it often cannot manage.
- Compare FOB and FCA for containerised cargo and explain why FOB's ship's-rail risk point is impractical once goods are containerised.
- Distinguish CFR and CIF from CPT and CIP by identifying which pair applies to sea freight only and which applies to any transport mode.
- Compare DAP, DPU and DDP by identifying which party clears import customs and which rule places unloading risk on the seller.
02Choosing the Right Rule for the Shipment
2 sessions · 8 points
Session 1Matching Incoterms to Mode of Transport and Risk Appetite
- Select FCA over FOB for containerised sea freight to move the risk transfer point to the carrier's receipt rather than the ship's rail.
- Choose between CIP and DAP for an inland buyer depending on whether the buyer or seller is better placed to arrange insurance and carriage.
- Avoid using a sea-and-waterway-only rule, such as FOB or CIF, for airfreight or multimodal shipments where it does not apply.
- Justify choosing DDP only when the seller has the customs expertise and local registration the import clearance requires.
Session 2Insurance, Title and Contractual Interaction
- Identify the minimum insurance cover a seller must arrange under CIF and CIP, and when a buyer should require broader cover instead.
- Separate the transfer of title, set by the contract of sale, from the transfer of risk, set by the Incoterms rule.
- Check that the Incoterms rule chosen is consistent with the payment method, such as a letter of credit's documentary requirements.
- Identify which party is responsible for arranging and paying for cargo insurance under each rule the organisation commonly uses.
03Cost Allocation, Duties and Landed Cost
2 sessions · 8 points
Session 1Allocating Freight, Insurance and Customs Costs
- Build a cost allocation table that shows which party pays freight, insurance, loading, unloading and terminal handling under a given rule.
- Calculate the landed cost of an import by adding freight, insurance, duty and clearance fees to the supplier's invoice price.
- Identify which Incoterms rule minimises the buyer's exposure to demurrage and detention charges at the port of destination.
- Reconcile a freight invoice against the Incoterms rule quoted to confirm the carrier has billed the correct party for each charge.
Session 2Customs Responsibility and Duty Interaction
- Identify which party is the importer of record under each Incoterms rule and what customs obligations that role carries.
- Explain why DDP shipments can expose the seller to import VAT and duty rules it may not be registered to handle correctly.
- Check that a certificate of origin or preferential trade documentation is arranged by the party responsible under the chosen rule.
- Flag a shipment where the Incoterms rule and the actual physical handling of the goods do not match, creating a compliance gap.
04Negotiating and Standardising Incoterms Use
2 sessions · 8 points
Session 1Negotiating Incoterms with Suppliers and Customers
- Negotiate a shift from EXW to FCA with a supplier to gain visibility and control over export documentation and loading.
- Present the total landed cost case for changing an Incoterms rule, rather than negotiating on unit price alone.
- Identify when a supplier's preferred Incoterms rule shifts cost or risk onto the buyer in a way the quoted price does not reflect.
- Agree an Incoterms rule for a new trade lane before the first shipment, rather than defaulting to habit or the supplier's invoice terms.
Session 2Standardising Incoterms Use Across the Organisation
- Set an internal policy on preferred Incoterms rules by transport mode to reduce inconsistent choices across buyers.
- Audit a sample of purchase orders and contracts to check the Incoterms rule and named place are stated correctly and consistently.
- Train requisitioners and buyers to state a complete Incoterms clause, including the version year and named place, on every order.
- Update Incoterms guidance and templates when the rules are revised, and communicate the change to procurement and logistics teams.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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