This article covers all 11 Incoterms® 2020 rules, focusing on FCL/LCL ocean imports and exports and Local Charges at origin and destination. The same control logic can be applied to air, road, rail and multimodal transport, using the relevant tariff, documents and delivery point.

Relevant parties include shipper, consignee, buyer, seller, carrier, forwarder, terminal, CFS and finance/procurement teams.
This article does not state market rates; charges depend on carrier, port, lane, equipment, cargo and date.
Incoterms apply when incorporated into the contract; the rule, place and edition should be stated.

Limitation: Local Charge is a market expression, not a globally standardised fee catalogue. “Handling” or “THC” may cover different services.

KEY TERMS

Term	Meaning	Operational role
Local Charge	Local fee collected by a carrier, terminal, depot, CFS, consolidator or forwarder at origin/destination.	Separates local cost from main freight.
Named place/port	The location written after the Incoterms rule.	Defines delivery and the cost boundary.
Freight Prepaid / Collect	Where/how the carrier collects freight.	Does not by itself determine final buyer–seller liability.
THC	Terminal Handling Charge.	Often charged per container or shipment.
D/O	Delivery Order.	Often charged per B/L or order.
CFS	Container Freight Station for LCL handling.	May be charged by W/M, RT, CBM, tonne or minimum charge.
Free Time	Carrier-granted free demurrage/detention period.	Sets the start of time-based charges.

OPERATING MECHANISM

Do not allocate Local Charges from the fee name or invoice addressee alone. Review four layers:

What operation does the charge pay for? Before delivery, at delivery, in main carriage, unloading, import or post-delivery.
Where is delivery under Incoterms? Under C rules, risk transfers earlier even though seller pays carriage to destination.
What is in the carriage contract? Check whether unloading, terminal or handling is already included.
What does the sales contract say? Identify the final bearer when one party must advance payment.

COLLECTOR – USUAL PAYER – TIMING

Charge	Collector	Usual Debit Note recipient	Timing	Common charging unit
Origin THC / Terminal Handling	Terminal, carrier or forwarder	Shipper or origin booking party	During origin terminal handling	Per container; sometimes per shipment
CFS / LCL handling	CFS, consolidator or forwarder	Shipper/consignee depending on origin or destination	At receipt, consolidation, deconsolidation or delivery	W/M, RT, CBM, tonne or minimum charge
Documentation / B/L fee	Carrier or forwarder	Party requesting document issuance	At issuance or amendment	Per B/L, HBL or shipment
D/O / Delivery Order	Destination carrier or forwarder	Consignee or delivery-order applicant	Before cargo release	Per B/L or order
Destination THC / handling	Terminal, carrier or forwarder	Consignee unless already included in seller-paid carriage	At destination terminal handling	Per container or shipment
CIC, equipment or imbalance surcharge	Carrier	Party specified by tariff and freight term	Based on trade lane, equipment and booking date	Per container or shipment
DEM / DET / Storage	Carrier, terminal or depot	Party billed operationally; final allocation follows contract and cause	After free time expires	Per container/day, often tiered

CALCULATION PRINCIPLES

Per container

Charge = number of containers × tariff by container type.

Per document/shipment

Charge = number of B/Ls, D/Os or shipments × applicable tariff.

W/M or Revenue Ton

Charge = chargeable units × tariff, using the LCL quotation rule.

Time based

Charge = days beyond free time × applicable tier rate.

Formula example, not a quotation: for two containers, with an illustrative THC tariff of USD 120/container and D/O of USD 45/B/L, the formula gives (2 × 120) + (1 × 45) = USD 285. Replace these figures with a valid tariff.

FACTORS THAT CHANGE THE CHARGE

Carrier/forwarder, port/terminal, POL–POD, FCL/LCL, 20’/40’/HC equipment, DG/OOG/Reefer, B/L type, booking date, exchange rate, free time, transshipment, peak season and prepaid/collect terms may affect the amount or invoice recipient.

INCLUDED / EXCLUDED SCOPE

Cost component	Question to lock	Risk if unclear
Ocean/Air/Road/Rail freight	Are route, origin/destination, equipment and validity stated?	Do not assume freight includes terminal, documentation or import charges.
Origin charges	Are THC, CFS, documentation, VGM, seal and pickup listed?	Identify booking party and Incoterms delivery point.
Destination charges	Are D/O, THC, CFS, handling, CIC and depot charges listed?	Reconcile against Arrival Notice and destination tariff.
Customs, tax and inspection	Are customs brokerage, inspections, duties and VAT included?	Incoterms do not replace a customs-service quotation.
Conditional charges	Are DG, OOG, Reefer, waiting, storage and DEM/DET triggers stated?	State trigger, unit and approval responsibility.

11-RULE INCOTERMS® 2020 COMPARISON

Rule	Origin Local Charges	Destination Local Charges	Control point
EXW	Buyer bears most costs from seller’s premises, including loading unless otherwise agreed, export clearance and origin handling.	Buyer.	EXW imposes minimum obligations on the seller; FCA is often more workable where the seller is better placed to clear exports.
FCA	Seller pays up to the FCA delivery point and clears exports; at seller’s premises, seller loads the buyer’s collecting vehicle.	Buyer from the delivery point onward.	Name the premises, terminal, depot or CFS precisely. At another place, seller delivers on its arriving vehicle ready for unloading.
CPT	Seller delivers to the carrier and pays carriage to the named destination.	Buyer normally pays unloading, import clearance and charges outside the carriage scope; seller pays unloading already included in its carriage contract.	Risk transfers when goods are handed to the carrier, not at destination.
CIP	Same as CPT, plus insurance procured by the seller at the CIP level.	Same as CPT.	CIP does not mean every destination Local Charge is included.
DAP	Seller pays to the named destination with goods ready for unloading.	Buyer handles import clearance/duties and normally unloading; seller pays unloading included in its carriage contract.	Specify the port, ICD, terminal or warehouse address.
DPU	Seller pays to destination and unloads the goods.	Buyer handles import clearance/duties and post-delivery costs.	The only rule requiring seller to unload at delivery.
DDP	Seller bears most costs to destination, including export, transit and import clearance and import duties.	Buyer normally unloads; seller pays unloading included in its carriage contract.	Check whether seller can legally perform importer obligations in the destination country.
FAS	Seller pays until goods are placed alongside the vessel and clears exports.	Buyer pays loading aboard, main carriage and destination charges.	Sea or inland waterway only.
FOB	Seller pays until goods are on board at the named port of shipment and clears exports.	Buyer pays main carriage and destination charges.	For containers delivered to a terminal before loading, FCA often reflects the actual handover better.
CFR	Seller pays to place goods on board and pays freight to destination port.	Buyer normally pays destination unloading/THC, D/O, import and inland delivery; no duplicate collection where unloading is in seller’s carriage contract.	Risk transfers on board at origin although seller pays freight to destination.
CIF	Same as CFR, plus insurance procured by seller at the CIF level.	Same as CFR.	CIF is not an all-in warehouse-delivery price.

No-double-charge principle: where unloading or terminal cost has already been paid by seller under the carriage contract, buyer should not be charged the same item again merely because a destination Debit Note is issued.

DOCUMENTS AND DATA TO CHECK

Reconcile the sales contract, quotation, booking, transport document and Arrival Notice. A mismatch in named place, freight term or booking party may change the invoice recipient.

RFQ data group	Required information	Control purpose
Sale term	Incoterms® 2020 plus precise named place/port	Sets the cost boundary.
Direction and route	POL/POD, pickup, delivery and transit points	Identifies origin/destination tariffs and lane surcharges.
Mode/service	FCL, LCL, air, road or rail; port–port or door–door	Defines comparable scope.
Shipment data	Packages, GW, NW, CBM, dimensions and container type	Determines charging unit.
Cargo attributes	DG, OOG, Reefer, batteries or high value	Determines surcharges and handling requirements.
Timing	Cargo-ready date, expected ETD/ETA and required validity	Controls quotation expiry.
Parties/documents	Shipper, consignee, booking party and B/L type	Determines Debit Note recipient and document data.

Sales contract/addendum: rule, edition, named place/port and reimbursement of advanced charges.
Quotation: included/excluded, validity, currency, payment term and origin/destination charges.
Booking Confirmation/Shipping Instruction: booking party, service mode, terminal and prepaid/collect.
B/L or AWB, Arrival Notice, Debit Note, invoice and published tariff.
Free time, cut-off, ETD/ETA, delivery-order timing and delivery plan.

APPLICATION PROCESS

Lock the Incoterms clause: for example: FOB – Cat Lai Port, Ho Chi Minh City – Incoterms® 2020.
Map the movement: pickup → export clearance → origin terminal → main carriage → destination terminal → import clearance → delivery.
Attach each charge to an operation: collector, unit and trigger time.
Apply the seller/buyer allocation: using delivery point and carriage contract.
Standardise the quotation: origin, freight, destination, customs/tax, inland and conditional charges.
Before ETA: compare Arrival Notice/Debit Note with the accepted quotation and challenge new, duplicate or incorrectly calculated items promptly.

Required output: a cost-allocation sheet showing charge, collector, advancing party, final bearer, contractual basis, charging unit and supporting document.

RISKS AND COMMON ERRORS

Error	Impact	Control
Writing only “FOB China” or “CIF Vietnam”	Port/terminal and cost boundary remain unclear.	State the precise named place/port and Incoterms® 2020.
Equating Freight Collect with final buyer liability	Wrong buyer–seller cost allocation.	Separate carrier collection mechanics from sale-contract obligations.
Treating CIF as all-in to warehouse	Missing budget for D/O, destination THC, imports and inland delivery.	Build a layered Landed Cost model.
Not checking whether unloading is already in freight	Duplicate payment risk.	Obtain an included/excluded confirmation.
Comparing quotations with different scope	Artificially low selection and post-booking additions.	Use one RFQ and compare the same route, validity, cargo, equipment and exclusions.
Applying Incoterms mechanically to DEM/DET	Delay-cost dispute.	Identify cause, free time, document/container control and a separate reimbursement clause.

AUTHORITIES AND SOURCES

Incoterms® 2020 are ICC rules incorporated by agreement. They are not a Local Charge tariff and do not replace the full sales or carriage contract.

Source	Use
ICC – Incoterms® 2020	Official overview of the current rules and their allocation of tasks, costs and risks.
ICC Incoterms® 2020 Checklist & Flowcharts	Decision support for rule selection and main-carriage responsibility.
ICC Academy – Practical guide to C and D rules	Supporting guidance on carriage, risk and unloading costs under C/D rules.
U.S. International Trade Administration – Know Your Incoterms	Supplementary explanation of tasks, costs and risks.

Open ICC Incoterms® 2020 Open ICC Checklist & Flowcharts

FAQ

Under CIF, does seller pay destination D/O and THC?

Not automatically. Seller pays freight to the destination port; buyer normally pays destination items outside freight. No duplicate collection should occur where unloading/terminal cost is already in seller’s carriage contract.

How far do seller’s Local Charges extend under FOB?

Seller pays costs required to deliver goods on board at the named port of shipment and clear exports. The exact fee list depends on the delivery point, terminal and tariff.

Does DAP include import duty?

No. Buyer handles import clearance and duties and normally unloading, except unloading already included in seller’s carriage contract.

Does DDP mean seller pays absolutely every charge?

DDP gives seller the maximum obligation, including import clearance and duties, but buyer normally unloads. Buyer-caused delay or breach costs require a separate clause.

Who pays demurrage and detention?

Do not allocate mechanically. Identify the cause, free time, the party controlling documents/container and delivery obligations, then apply a separate reimbursement mechanism.

If the invoice is issued to consignee, is consignee the final bearer?

Not necessarily. Consignee may pay to obtain release and still recover the amount where it belongs to seller under the sales contract.

APPLICATION NOTE: This is an evergreen allocation framework, not a quotation. Any current tariff, charge or free-time statement should show update date, validity, route, cargo, currency and included/excluded scope.

FREIGHT RATES

Who Pays Local Charges Under Each Incoterms® 2020 Rule?

Who Pays Local Charges Under Each Incoterms® 2020 Rule?

QUICK SUMMARY

SCOPE

KEY TERMS