When buying or selling a used truck across borders, one of the most critical—but often misunderstood—elements is the choice of Incoterms. Short for “International Commercial Terms,” these standardized trade definitions published by the International Chamber of Commerce (ICC) clarify who pays for what, when risk transfers, and where delivery occurs. With the release of Incoterms® 2020, businesses involved in cross-border commercial vehicle transactions must understand which term best suits their deal.
Why Incoterms Matter in Used Truck Transactions
Used trucks are high-value, bulky assets that often require specialized transport, insurance, customs clearance, and documentation. A misstep in assigning responsibilities can lead to unexpected costs, delays, or even legal disputes. Incoterms provide a universal language that both buyer and seller can reference to avoid ambiguity.
For example, if you’re a logistics company in Texas purchasing a used Volvo FH from Germany, does the seller arrange shipping to Houston? Who insures the truck during ocean transit? When does ownership—and liability—officially transfer? The chosen Incoterm answers all these questions.
Key Incoterms 2020 Relevant to Used Truck Deals
While Incoterms 2020 includes 11 rules, only a few are commonly used in heavy equipment and commercial vehicle trades:
EXW (Ex Works)
The seller makes the truck available at their premises (e.g., a dealership yard in Rotterdam). The buyer assumes all costs and risks from that point onward—including export clearance, inland transport, ocean freight, import duties, and final delivery. EXW favors sellers but places heavy responsibility on buyers, especially those unfamiliar with international logistics.
FCA (Free Carrier)
Under FCA, the seller delivers the truck to a carrier or another person nominated by the buyer at a named place (e.g., a port or terminal). The seller handles export clearance, reducing the buyer’s administrative burden. This term is flexible and increasingly popular for containerized or roll-on/roll-off (RoRo) shipments of used trucks.
CIF (Cost, Insurance, and Freight)
CIF applies only to sea or inland waterway transport. The seller pays for main carriage and minimum insurance to the named port of destination (e.g., Port of Long Beach). However, risk transfers to the buyer once the truck is loaded onto the vessel. Note: CIF is often misused—many experts recommend using CIP instead for multimodal transport.
DAP (Delivered at Place)
The seller bears all risks and costs (including export clearance and main transport) until the truck arrives at the agreed destination (e.g., a warehouse in Calgary). The buyer handles import clearance and any local duties. DAP offers strong buyer protection and is ideal for buyers wanting “doorstep” delivery without managing complex logistics.
DDP (Delivered Duty Paid)
The most comprehensive term for buyers: the seller handles everything—including import duties and taxes—until the truck is delivered to the buyer’s location. While convenient, DDP can be costly for sellers and may involve navigating unfamiliar foreign customs regulations. Use cautiously and only with trusted partners.
How to Choose the Right Incoterm for Your Deal
Selecting the optimal Incoterm depends on several factors:
- Logistics expertise: If you’re new to importing, avoid EXW. Opt for DAP or DDP to shift complexity to the seller.
- Cost control: Sellers may offer lower prices under EXW or FCA but expect you to manage shipping. Compare total landed cost, not just the truck price.
- Transport mode: For RoRo or container shipping, FCA or DAP are typically safest. Avoid CIF unless shipping exclusively by sea.
- Relationship trust: DDP requires high trust, as the seller controls customs valuation—misdeclaration can trigger penalties for the buyer later.
Common Pitfalls to Avoid
Many used truck deals go awry due to vague or incorrect Incoterm usage:
- Using outdated terms: Incoterms 2010 is obsolete. Always specify “Incoterms® 2020” in contracts.
- Omitting the named place: “FCA Rotterdam” is valid; “FCA” alone is not. Precision prevents disputes.
- Assuming insurance coverage: Only CIF and CIP include mandatory insurance. Under EXW or DAP, you must arrange your own policy.
Conclusion
Choosing the right Incoterm isn’t just about paperwork—it directly impacts your bottom line, timeline, and risk exposure in used truck transactions. Whether you’re a fleet operator sourcing vehicles from Europe or a dealer exporting surplus units to Canada, aligning on a clear, modern Incoterm (like FCA or DAP) builds trust and ensures smoother deals. Always consult a freight forwarder or trade advisor before finalizing your contract, and never assume responsibilities are “implied.” In global trade, clarity is currency.