Incoterms are not boilerplate. They define, with legal precision, the exact point at which risk transfers from seller to buyer — and by extension, who bears the loss when something goes wrong between factory gate and final destination.
In high-value commodity trades, getting this wrong can mean the difference between a successful deal and a $5M insurance dispute that destroys the commercial relationship and ties up your legal team for two years.
Dispute 1: The Rotterdam Port Incident
A phosphate cargo traded under FOB terms (Free On Board, Port of Origin) was damaged during loading at the port of origin. The seller argued that risk had not yet transferred because the goods had not crossed the ship's rail. The buyer's forwarding agent had, however, already taken constructive delivery. The contract used the phrase "FOB Rotterdam" — which under Incoterms 2020 applies to the destination port, not the origin. Three months of arbitration followed.
Dispute 2: The Insurance Gap
A bitumen trade was agreed "CIF Fujairah" — Cost, Insurance and Freight. The seller arranged marine insurance to the destination port. The cargo was damaged after discharge but before the buyer had arranged onward inland coverage. Under CIF terms, the seller's insurance obligation ends at the destination port. The $800,000 damage fell in the gap.
Dispute 3: The DDP Customs Bill
A European buyer insisted on DDP (Delivered Duty Paid) terms for a coal shipment from South Africa. The seller agreed without fully understanding that DDP places the entire import customs burden — including VAT, import duties, and customs clearance — on the seller in the buyer's country. The unexpected customs liability added $340,000 to the cost of the deal.
The Lodfy Incoterms Module
Every transaction profile on Lodfy includes a plain-language incoterms display showing the exact risk transfer point, insurance obligations, and freight responsibilities for both parties. Ambiguity is eliminated before the contract is signed.