Incoterms® 2020 FCA and CPT – Best practice

Introduction

This guidance paper responds to a key issue in port practice highlighted in a 2023 worldwide survey carried out by the ICC Commission on Commercial Law and Practice on the use of the Incoterms 2020 rules in major ports internationally: the frequent mismatch between the chosen Incoterms 2020 rule and the practical realities of shipping goods in containers through ports. This guidance paper is relevant to users of the Incoterms 2020 rules for shipping goods in containers through ports anywhere in the world.

Guidance paper

The survey reveals that the top two considerations for traders when selecting a Incoterms 2020 rule are

1. Controlling freight costs

2. Clarifying the transfer of risk

Where goods are shipped in containers through a port at departure and/or at arrival, the Incoterms 2020 rules FCA and CPT provide the best matching point to delineate freight cost and transfer of risk:

• “FCA container terminal [port of departure] Incoterms 2020”

• “CPT container terminal [port of arrival] Incoterms 2020”

The traditional maritime Incoterms 2020 rules FOB, CFR, and CIF have an on-board point of delivery that is not suitable for containers since users have in practice no control over the start of freight cost and transfer of risk up to or after this point. This mismatch has for years given rise to additional costs, Terminal Handling Charges (THC) overcharge/double charging in ports, uncertainty, and disputes.

The trading community will benefit greatly by shifting practice away from the traditional maritime terms FOB, CFR, and CIF and replacing them with the Incoterms 2020 rules which are far more suitable for containers: FCA, CPT, and CIP.

FCA and CPT (or CIP if insurance cover is agreed) are in reality the “updated” maritime Incoterms 2020 rules for containers, identifying what actually happens to containers, rather than pretending that the old maritime terms adequately describe the container trade. The FCA/CPT/CIP rules are designed to control freight cost and transfer of risk for all goods shipped in containers through a port since they define the appropriate point to transfer freight costs and risk.

This guidance paper was drafted by the Co-chairs and the Special Adviser of the International Chamber of Commerce (ICC) Incoterms 2020 Drafting Group: Christoph Martin Radtke, David Lowe, and Charles Debottista together with Professor GAO Xiong, Executive Chair of the ICC China Commission on Commercial Law and Practice.

Why FOB gets expensive in container trade

So much for the ICC recommendation. From advisory practice comes the rest: why the mistake is so persistent, and what it actually costs.

FOB sits in countless contracts because it has always been there. The rule comes from a time when the seller genuinely accompanied the goods to the ship’s rail. In container trade, which carries by far the greater part of general cargo today, that moment no longer exists. The seller drops the container at the terminal and never sees it again.

That is where the gap opens. Under FOB, risk passes only once the goods are on board. Between handover at the terminal and loading, however, there is a period in which the seller carries the risk without any remaining access to the goods. If something breaks in that window, the dispute shifts to a question of proof that nobody wins: when exactly did the damage occur, in the terminal or during loading? The seller no longer holds the goods, the carrier was not yet responsible, and the buyer points to the rule.

Then there is the cost side. Terminal handling charges are regularly billed twice under the maritime rules, once through the freight and once directly at the terminal, because the rule draws no clean line between the cost blocks.

Switching costs nothing but attention while drafting. Agreeing FCA sets the transfer of risk at a moment both sides can evidence: handover at the named place, receipted. The delivery point belongs in the clause by name, because FCA has two variants, and the choice between your own premises and the container terminal moves both risk and cost considerably.

A full overview of all eleven clauses, the transfer of risk, and the allocation of costs is in the article “Incoterms® 2020: practical overview”. How to avoid tariff traps specifically on exports to the US is covered in “How to Avoid U.S. Tariffs as an International Supplier”. Why the suitable container clause nonetheless rarely makes it cleanly into the contract is covered in the Reality Check.

Reference: Poleacov, P. (2026). Incoterms® 2020 FCA and CPT – Best practice. INN.LAW. https://inn.law/en/perspectives/incoterms-best-practice/

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