Which Incoterm to Use for Auto Parts Orders from Thailand

The Incoterms® 2020 rules published by the International Chamber of Commerce (ICC) decide where the seller delivers, when risk passes to the buyer and who pays which costs. They do not decide payment terms or when ownership transfers. Our Thailand automotive parts export guide summarises all eleven rules in one table. This guide is the practical follow-up: how to choose a rule for a real auto parts order.

Start with who books the freight

The most useful first question is whether you already work with a freight forwarder that can collect cargo in Thailand.

DDP makes the seller responsible for import clearance and duties at destination. That requires a party able to act as importer in your country, so for export orders it is rarely practical.

Containers, mixed orders and LCL

Auto parts orders from several product lines are usually consolidated into one container, or shipped as less-than-container load (LCL) through a consolidation warehouse (container freight station).

• FCA names the place where the goods are handed over, for example the loading terminal or the forwarder's consolidation warehouse. Risk passes there, which matches how containerised cargo is actually handled.
• FOB passes risk only when the goods are on board the vessel. For a sealed container delivered to the terminal days before loading, that leaves a gap between hand-over and risk transfer. FOB is still common in practice; if you use it, state the port of loading precisely.
• For a mixed container order, one Incoterm and one named place should apply to the whole shipment, so the invoice, packing list and bill of lading agree.

Name the place precisely

An Incoterm without a precise place causes disputes. Write the rule, the named place and the version, for example:

• FCA (full address of the named warehouse or terminal), Thailand, Incoterms 2020
• FOB Laem Chabang, Incoterms 2020
• CIF Mombasa, Incoterms 2020

Laem Chabang is Thailand's main deep-sea port; Bangkok Port on the Chao Phraya River handles smaller vessels. "FOB Bangkok" for cargo that actually loads at Laem Chabang is a common source of confusion over trucking and terminal costs.

Letters of credit and bills of lading

Letters of credit often require an on-board bill of lading. Under FCA the seller hands the goods to the carrier before loading, so it may not receive one automatically. Incoterms 2020 added an option to FCA for this case: the parties can agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller. If you pay by letter of credit and buy FCA, include that instruction in the contract and in the credit terms.

Insurance under CIF and CIP

• CIF requires the seller to buy only minimum cover, Institute Cargo Clauses (C) or similar, for at least the contract price plus 10%.
• CIP requires broader cover, Institute Cargo Clauses (A), under the 2020 rules.

Under both rules the risk is already yours while the goods travel. For high-value orders, ask for (A) cover under CIF or arrange your own policy under CFR.

Destination charges under CFR and CIF

CFR and CIF include sea freight to your port, not everything that happens there. Unloading and terminal handling at the port of discharge are for the buyer unless the seller's contract of carriage includes them. Delivery-order fees, storage and customs clearance are also usually billed to the consignee. Ask your forwarder or customs broker for the destination charges before comparing a CFR price with an FCA or FOB price.

Batteries and other dangerous goods

Lead-acid batteries are regulated as dangerous goods for sea transport under the IMDG Code, with separate provisions for filled, non-spillable and lithium batteries. The Incoterm decides who books the freight, so it also decides who must book the cargo as dangerous goods:

• Under FCA or FOB, your forwarder books the vessel and must confirm the carrier accepts the battery cargo and the declaration.
• Under CFR or CIF, the seller books the freight and arranges dangerous goods space.

See how to ship batteries internationally for classifications and packing.

Inspection programs are separate

Some destinations require pre-shipment inspection or certification of vehicle parts, batteries or tires. Those programs sit outside the Incoterms rules: agree separately who books and pays the inspection and when it must happen, because a late inspection can delay loading whatever rule you choose.

What to put in your RFQ

• Incoterm, named place and "Incoterms 2020"
• Port of discharge or final delivery place
• Whether you have a forwarder in Thailand, and its contact once the order is confirmed
• Insurance requirement (who insures, which cover)
• Payment method, and any letter of credit document requirements
• Inspection or certification programs that apply at destination

Send these with your parts list and the quotation can be prepared on the terms you actually need. Our export process page explains how shipments are prepared.