Incoterms in EPC contracts decide three things at once: who arranges transport, who pays for it, and where the risk passes from supplier to project. On project cargo those three rarely sit at the same point, and the gap between them is where claims live. The rule you pick for a container of valves should not be the rule you pick for a 300-tonne reactor.
Why Incoterms for project cargo are different
Incoterms were written for goods that fit a standard transport chain. Project cargo does not. A single item may need a route survey, a permit, a mobile crane at both ends, a part charter and a week of sea fastening. The question “who delivers to the named place” stops being simple when the named place is a quay that has to be reserved eight months ahead.
The practical consequence: on an EPC project you are not choosing one Incoterm. You are building an Incoterms matrix — a rule per category of goods, per lane, with the named place written out in full.
Where risk really changes hands
The two mistakes I see most often are mirror images of each other.
EXW across the board. Attractive on paper: the project controls every movement and buys freight at its own rates. In practice it hands the project the export formalities in every supplier country, the loading risk at every workshop, and the job of chasing a hundred suppliers for collection readiness. Projects adopt it for cost control and then quietly fail to resource it.
DDP for oversized items. It looks like the supplier takes everything. But a supplier who has never moved a 5-metre-wide item to your site will price the risk without understanding it, subcontract it to whoever is cheapest, and discover the bridge restriction at the same moment you do — except now the damaged item is on their account and your schedule.
Under FCA at the supplier’s works, risk passes when the goods are loaded onto your carrier. But if the item needs a 200-tonne crane to load it, who provides that crane, and who is liable when it is sitting in the slings? The answer is not in the three-letter code. It belongs in the contract text, with the Incoterm as shorthand, not as substitute. For heavy lift, write the loading and lashing responsibility out explicitly — every time.
What usually works on project cargo
- FCA named works for anything oversized, with loading responsibility spelled out and the project’s forwarder nominated. The project keeps control of routing and vessel choice, the supplier keeps the part they understand.
- FOB or FAS named port where the supplier is near a port and has genuine experience with it.
- CIP named site for standard, containerised scope where the supplier’s freight buying is as good as yours and the volume is not worth managing.
- DAP named site only when the supplier has demonstrably done that exact movement before.
Whatever is chosen, name the place precisely. “FCA supplier’s works” is not a place. “FCA Rotterdam, Quay 4321, loaded on carrier’s trailer” is.
Freight forwarder versus EPC contractor: the role split
This is the other half of the same question, and it is routinely left vague until something goes wrong.
The EPC contractor owns the delivery obligation to the owner. The freight forwarder executes movements and documentation. The gap between those two sentences is large: route surveys, permits, port nominations, customs positions, claims handling and the day-to-day chasing of suppliers all have to be assigned to one or the other, by name, in the contract.
A forwarder who is handed a packing list and a date will deliver exactly that. A forwarder who is made responsible for lane planning, and resourced for it, becomes part of the project team. Which of the two you have is decided at selection, not later.
Selecting a project freight forwarder
Price per lane is the least useful comparison, because the scopes being priced are never identical. More telling:
- Have they handled this cargo profile — not “project cargo” in general, but this weight class on this kind of route?
- Who exactly is the named operational contact, and what else are they running that quarter?
- What is their own carrier and crane network in the destination country, as opposed to a local agent they have never worked with?
- How do they handle a claim? Ask for a real example, with the outcome.
- Are they willing to be measured on the lane KPIs you intend to use?
Customs and temporary import for project cargo
Two customs positions decide most of the paperwork risk on a project. Permanent import is the simple case: the goods stay, duty is paid, the item becomes part of the plant. Temporary import is the one that gets missed — cranes, SPMTs, lifting beams, test equipment and tooling that arrive, do their job and leave again.
Temporary import regimes exist almost everywhere and they all reward preparation and punish improvisation. They have lead times measured in weeks, they need a guarantee or a carnet, and they come with a hard re-export deadline that the construction schedule will cheerfully overrun. Assign this to a named owner in the logistics execution plan, with the deadline on the project schedule rather than in someone’s inbox.
Write the matrix once, early
The Incoterms matrix belongs in the logistics execution plan, before the first purchase order. It takes an afternoon to draft and it settles, in advance, the arguments that otherwise surface one shipment at a time — each time with a damaged item on the quay and two parties reading the same three letters differently.