Every Incoterm is followed by a named place. The seller writes “FOB Shanghai” or “EXW Yiwu Factory Gate 3” or “DDP 2150 Industrial Boulevard, Houston TX 77032.” The text after the three-letter code is not flavour. It is the legal point at which risk, cost, or both move from one party to the other. A purchase order that lists an Incoterm without a named place is an unfinished contract, and arbitrators treat it that way.
What the named place actually fixes
Each Incoterm uses the named place differently. The same city can mean four different things depending on the term in front of it.
| Incoterm | What the named place fixes |
|---|---|
| EXW (named place of delivery) | The exact factory address where the buyer picks up |
| FOB (named port of shipment) | The port where the cargo is loaded on board the vessel |
| CIF (named port of destination) | The port to which the seller pays freight and minimum-cover insurance |
| CIP (named place of destination) | The inland or port destination where carriage is paid to |
| DDP (named place of destination) | The exact buyer address where seller delivers, all duties paid |
FOB Shanghai means the seller’s job ends when the cargo crosses the ship’s rail at Shanghai port. CIF Houston means the seller pays freight to Houston, but risk transferred at the Chinese load port. DDP 2150 Industrial Boulevard means the cargo arrives at that exact dock door, customs cleared, duties paid. The named place is the only thing that tells you which.
Why ambiguous named places lose disputes
A vague named place is the single most common cause of post-shipment disputes that go to ICC arbitration. Three patterns recur:
- City-only without sub-location. “EXW Shenzhen” is unworkable because Shenzhen has dozens of industrial zones and hundreds of factories. The buyer’s truck cannot find the cargo. The seller insists the cargo was ready. The cargo sits. Always specify the exact factory address: “EXW Building 7, Foxconn Longhua Campus, Bao’an District, Shenzhen.”
- Port without terminal. “FOB Shanghai” is acceptable for most purposes because Shanghai port operates as a single Incoterms reference even though it has multiple terminals (Yangshan, Waigaoqiao, Wusongkou). But “FOB Ningbo” without specifying Beilun, Daxie, or Meishan can cause carrier-booking confusion when the seller’s forwarder sends documents referencing one terminal and the buyer’s forwarder books another. For container shipments this is usually self-correcting; for DG cargo it can hold the booking.
- Country instead of place. “DDP USA” is meaningless. The seller cannot know where to deliver, what the road permits cost, or what the duty exposure is on a routing they have not chosen. Always require the destination address on the purchase order before the contract is signed.
How to write a named place that holds up
The named place should be specific enough that a freight forwarder, a customs broker, and a court can all read the same address. For Incoterms 2020 the ICC publishes the convention “[Incoterm] [exact named place]” with no abbreviation in formal contracts.
A working buyer writes:
- EXW Building 12, No. 88 Xinghu Road, Suzhou Industrial Park, Suzhou, Jiangsu, China
- FOB Shanghai, China (Incoterms 2020)
- CFR Port of Houston, Texas, USA (Incoterms 2020)
- DDP 2150 Industrial Boulevard, Houston, TX 77032, USA (Incoterms 2020)
Always include the country and always include the parenthetical “(Incoterms 2020)” reference. The country prevents disputes when port names are ambiguous (Portland, Maine vs Portland, Oregon; Cambridge, UK vs Cambridge, Massachusetts). The Incoterms version reference is what tells an arbitrator which rulebook applies.
When the named place changes the deal
The named place is not a formality. Three situations show why.
A factory in Yiwu quotes EXW Yiwu Factory at USD 1,150 per metric tonne. The same factory quotes EXW Ningbo Port at USD 1,210 per tonne. The USD 60 difference is the inland trucking from Yiwu to Ningbo, which the factory absorbs in the second quote. Same Incoterm, different named place, different price, different responsibility for arranging the truck and the customs clearance.
A buyer signs FOB Tianjin and pays freight from Tianjin. The factory then realises it cannot get a sailing slot from Tianjin within the contract window and offers to load from Qingdao at the same FOB price. The named place is now wrong. Either the contract is amended to FOB Qingdao with the buyer’s freight booking redirected, or the factory pays the inland reposition. Most forget to do either, the buyer discovers the routing mismatch when the B/L shows Qingdao as port of loading, and the dispute starts.
A buyer signs DDP New York. The seller assumes “New York” means the port of New York. The buyer assumes it means the warehouse in Newark, New Jersey. Cargo lands at Port Newark, customs clears, and now sits at the terminal because no one booked the final-mile truck. Demurrage starts.
Always confirm the named place before signing
Before any purchase order is countersigned, read the named place out loud and check three things: it is a specific address (not a country, not a region), it is reachable by the routing both parties have agreed to, and the Incoterm version reference is included. Five minutes of pre-signing clarity prevents the dispute that takes six months to resolve.