look under "taxes and shipping" tab of the customer to enter a shipping method

you still set up the terms in "ship via"

you can chage the header on the invoice to anything you want in place of FOB and type in what you want in the order entry for it under the order details tab

That Shipping Method field is for courier names, method of transportation, etc, not Incoterms (which BV for some reason assume everyone uses F.O.B only)

I know we can change the FOB heading in invoice rpt file (ie: change it to say 'Shipment Terms'), and then  type in what we want at Order details > FOB (ie: the actual Incoterm, FOB, CIF, EXW etc), in fact, that F.O.B field can be set with default message at System Setup, which we actually set to say EXW, because that's the shipping terms to majority of our customers. But it is not ideal because some customers uses different shipping terms, and it should be something that only need to set once (at Customer Module) and not have to be repeated every time something is shipped to them.  

you could add the customer notes field to your invoice under the info tab in customer through report designer if you don't use it

Good idea, but in the Report Designer, I can't locate the proper Database Fields that corresponds to that Notes field from Info tab.

In any event, these are all work around solutions.... when it should be (IMO) a standard feature.