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Learn trade terms by scenario: who does what, from factory to buyer
A free, illustrated training module on the practical side of the 11 Incoterms® 2020 rules. Each lesson follows one realistic shipment and shows, stage by stage, who arranges the work, who pays, who carries the risk and which documents change hands — for the seller, the buyer and every professional in between.
Reviewed by: pending — expert review by TermVisa's editor (retired VP, international transport) in progress · Last updated
A deal between a seller and a buyer, anywhere in the world
Every Incoterms® scenario starts with a sales contract between a seller and a buyer, who can be in any two countries. Each lesson names both — city and country — and shows the shipment from both sides, so you can follow it whether you sell, buy or work in between.
Transport modes: EXW, FCA, CPT, CIP, DAP, DPU and DDP work for any mode — road, air, sea, rail or multimodal. FAS, FOB, CFR and CIF are for sea and inland waterway only. Our scenarios mix cross-border trucking, air freight, container and bulk shipping, and multimodal moves.
What this module covers
11 scenario lessons
One realistic shipment per Incoterms® 2020 rule, between sellers and buyers on every continent, with an illustrated journey showing who pays and where risk passes.
Every party, not just buyer and seller
Forwarders at both ends, carriers by mode, the cargo insurer, export and import customs brokers, banks under letters of credit and terminals.
Mistakes, questions, quizzes
Common mistakes, the questions to ask your forwarder, broker and insurer, a 3-question self-check per lesson and four fictional dispute cases.
We explain practical responsibilities in our own words. We do not reproduce the Incoterms® rules: for the official text, get ICC's Incoterms® 2020 publication.
The cast: who is involved in an international shipment
Seller / exporter
Makes or sources the goods, packs them for the journey, issues the commercial invoice and does whatever part of transport, clearance and insurance the chosen rule gives it.
Buyer / importer
Pays for the goods, takes delivery at the agreed place and handles the rest of the journey — very often including import clearance, duties and taxes as importer of record.
Origin freight forwarder
Books space with carriers, organises pick-up, consolidation and terminal delivery, prepares shipping documents and often coordinates the export broker. Works for whichever party controls the main carriage.
Destination freight forwarder
The origin forwarder's partner at arrival: tracks the cargo, collects arrival charges, releases the goods against payment or documents, and arranges delivery to the final address.
Ocean carrier (shipping line)
Carries containers or bulk cargo port to port and issues the bill of lading or sea waybill. Its liability for loss or damage is limited by convention and contract — often well below the value of the goods.
Air carrier (airline)
Flies the cargo airport to airport, usually booked through a forwarder, and issues the air waybill. Requires security screening and correct dangerous-goods declarations before acceptance.
Road carrier (trucking company)
Picks up and delivers by truck, issues a bill of lading or CMR consignment note, and charges waiting time (detention) when loading, unloading or border clearance takes too long.
Rail carrier
Moves containers or wagonloads between inland terminals and ports. Often contracted by the shipping line as part of a through bill of lading, so the cargo may be in a carrier's hands long before it reaches the ship.
Cargo insurer
Covers loss of or damage to the goods in transit under a policy or certificate. The level of cover (for example 'all risks' or a restricted set of named perils) and the insured value decide what is actually paid.
Customs broker (export)
Files the export declaration for the exporter in the country of departure, checks export controls, permits and origin paperwork, and gets the release the carrier needs before loading.
Customs broker (import)
Classifies the goods, declares their value and origin, pays duties and taxes on the importer of record's account and obtains release at destination. Can only act for a party the local law allows to import.
Banks (letters of credit)
Under a letter of credit, the buyer's bank promises to pay the seller against documents that match the credit exactly — transport document, invoice, insurance certificate and so on. Banks check paper, not goods.
Terminals and ports
Receive, store, load and unload cargo, and charge for it — terminal handling charges (THC), storage and gate fees. Cut-off times and free-time limits at terminals drive many disputed extra costs.
Suggested learning path
Start with the two ends
EXW gives the buyer almost everything; DDP gives the seller almost everything. Seeing both extremes makes every other rule easier to place.
The everyday rules for any mode
FCA, CPT and CIP work for trucks, planes, rail and containers. Watch how the place where risk passes can differ from the place where the seller stops paying.
Delivered at destination
The seller carries the goods and the risk all the way to the buyer's country. The difference is who unloads — and who clears and pays import duties.
Sea and inland waterway rules
Built around the vessel itself. Best for bulk and break-bulk cargo loaded directly onto a ship — not for containers handed over at a terminal.
Then test yourself on real disputes
Four fictional 'What went wrong?' cases show how a well-known rule, used in the wrong situation, turns into a costly dispute.
DDP, no importerFOB for a containerCIF, minimum coverEXW, export blocked
All 11 lessons
Any mode of transport
Sea and inland waterway only
What went wrong? Four fictional cases
DDP into a country where the seller can't be importer
A Shenzhen lighting maker quotes 'all-in' DDP to a São Paulo retailer. The containers reach Santos — and nobody can clear them.
Fictional caseFOB used for a container handed over at an inland depot
An Indian tool maker hands a container to the shipping line at an inland depot under FOB Mundra. It is damaged on the rail leg — whose loss is it?
Fictional caseCIF with minimum insurance and a damaged high-value cargo
A high-value machine travels CIF from Taiwan to Poland with minimum cover. It arrives damaged by rough handling — and the insurer says no.
Fictional caseEXW where the buyer couldn't clear the export
An Istanbul distributor sends its own truck to collect machine tools in Stuttgart under EXW. The truck waits — nobody can file the EU export declaration.
Official rules and further reading
- Official Incoterms® rules (ICC) — the authoritative source.
- Official Incoterms® 2020 publication (ICC)
Further reading (general background, not an official source): Wikipedia article on the Incoterms® rules