Incoterms 2020 for Bulk Liquids

The rules that matter for liquid cargoes

The table summarizes each rule as the trade uses it for tanker and barge cargoes. Keep risk and cost apart: under CFR and CIF the seller pays freight all the way to the destination, yet risk has already passed to the buyer at the load port. FCA and DDP appear less often but are useful for pipeline, rail and truck deliveries.

From the ship's rail to on board

Incoterms 2000 placed the risk point for FOB, CFR and CIF at the ship's rail. Incoterms 2010 replaced it with delivery on board the vessel, and Incoterms 2020 kept that wording. The change retired the old picture of risk passing as cargo crossed an imaginary vertical line above the rail, which never suited liquids pumped aboard through a hose or loading arm.

Oil-industry general terms and conditions often go further and define the exact point as the vessel's permanent hose connection at the loading manifold. Under that wording the product is at the seller's risk until it passes the flange where the shore hose or loading arm meets the ship's piping. If a contract still says "ship's rail", it is drawing on an older edition or a company form, and you should know which one.

What happened to DES

DES (Delivered Ex Ship) and DEQ (Delivered Ex Quay) were Incoterms 2000 rules. Incoterms 2010 withdrew them, together with DAF and DDU, and introduced DAP and DAT. Incoterms 2020 then renamed DAT as DPU (Delivered at Place Unloaded). For a cargo delivered on board the arriving vessel at the discharge port, DAP is the closest current equivalent of DES.

DES survives in oil and gas trading because many term contracts and company terms were drafted around it. That works only if the contract says what DES means, either by expressly incorporating Incoterms 2000 or by defining delivery, risk and title in its own general terms. A bare "DES" paired with "Incoterms 2020" is a contradiction that invites a dispute.

B/L quantity or outturn quantity

Incoterms say nothing about how much was delivered. In FOB, CFR and CIF sales the invoice is normally based on the bill of lading (B/L) quantity determined at the load port, because that is where delivery happened. Delivered sales on DAP or DES terms are often invoiced on outturn, the quantity measured into shore tanks at discharge.

Some contracts split the difference: a provisional invoice on the B/L figure, then final settlement on outturn within an agreed tolerance. Whichever basis you choose, it should match the measurement clause and the inspector's instructions, or the certificate you receive will not answer the question the invoice asks.

What Incoterms do not cover

Incoterms are narrower than many people assume. They allocate delivery, risk, carriage, insurance and clearance duties and very little else. Everything in the list below has to be written into the sale contract itself, or into the general terms and conditions that the contract incorporates by reference.

• Transfer of title, or property, in the goods
• Price, payment terms and documentary credits
• Quantity and quality determination, and the choice of inspector
• Laytime and demurrage between seller and buyer
• Breach, remedies, force majeure and governing law
• Sanctions, export controls and compliance warranties

A note on US domestic "FOB"

In US domestic trade, terms such as "FOB origin" and "FOB destination" are often read under the Uniform Commercial Code rather than Incoterms, and pipeline and rack sales use their own terms entirely. When a contract could be read either way, state "Incoterms 2020" expressly so that there is no doubt which set of meanings the parties intended.