Incoterms in the real world – where businesses still get caught out
Most Incoterms issues don’t come from misunderstanding the rules.
They come from everything around them.
In day-to-day logistics, Incoterms often work exactly as written – and still cause problems. Not because they’re wrong, but because real supply chains are messier than contracts.
“That’s not what we thought it covered”
One of the most common moments Incoterms surface is when an unexpected cost appears.
The Incoterm is technically correct.
The charge is legitimate.
But someone, somewhere, assumed it was included.
This often happens when:
- routes change
- ports are substituted
- or a shipment moves slightly differently from the last one
The Incoterm hasn’t changed, but the context has – and that’s where surprises creep in.
When finance, operations and sales aren’t aligned
Incoterms are agreed early, often during commercial discussions.
But the impact tends to land later, with operations teams managing movement and finance teams reconciling costs. If those teams aren’t aligned on what the Incoterm actually means in this shipment, friction follows.
The result is rarely a major dispute.
It’s more often a slow drip of queries, delays, and “can you just check this?” conversations that add time and uncertainty.
The inherited Incoterm problem
Another common scenario is legacy.
A business uses the same Incoterm because:
- it’s always been used
- it worked well once
- or changing it feels unnecessary
Over time, suppliers change, volumes increase, and routes become more complex. The Incoterm stays the same, even if the balance of responsibility no longer makes sense.
That’s when businesses find themselves carrying risk without control, or managing issues they’re not best placed to solve.
Responsibility doesn’t always equal visibility
On paper, an Incoterm can assign responsibility very clearly.
In practice, visibility matters just as much.
If a party is responsible for a stage of the journey but has limited insight into how it’s being handled, delays become harder to manage and decisions slower to make. Nothing is technically wrong – it just isn’t efficient.
This is where Incoterms that once felt straightforward start to feel restrictive.
The gaps Incoterms don’t cover
Incoterms are precise, but they aren’t comprehensive.
They don’t deal with:
- how delays are communicated
- what happens when timelines slip
- who takes the lead when conditions change
Those details tend to sit outside the Incoterm, often assumed rather than agreed. When pressure builds, those assumptions are what get tested.
A more useful way to review Incoterms
Instead of revisiting definitions, it’s often more helpful to ask:
Who actually has control at each stage?
Who is best placed to solve problems when they arise?
Does responsibility sit where decisions can realistically be made?
When those answers change, it’s usually a sign the Incoterm should be revisited too.
If your Incoterms made sense when they were agreed but feel harder to work with now, that’s not unusual. A short review often uncovers small changes that make a big difference.
Feel free to get in touch with our team to talk. And if you want to read more about the actual Incotemrs themselves, head over to our blogpost on decoding Incoterms.