Incoterms (“International Commercial Terms”) are a global shorthand that defines, for any shipment, who pays for each leg and who carries the risk if something goes wrong. They don’t cover everything in a sale, but they settle the two questions that cause the most arguments. Here are the four you’ll meet most often.
EXW — Ex Works
The seller just makes the goods available at their factory or warehouse. You handle everything else — export clearance, freight, insurance, import, delivery. Cheapest sticker price, most work and risk for you. Good only if you (or your forwarder) can manage the origin side.
FOB — Free On Board
The seller delivers the goods, cleared for export, onto the vessel at the origin port. From that point it’s yours. FOB is the most common term for ocean imports because it gives you control of the main freight leg (often the biggest cost) while the seller handles the messy origin paperwork.
CIF — Cost, Insurance & Freight
The seller pays freight and insurance to the destination port. Convenient, but you lose control of carrier choice and often pay a marked-up rate buried in the goods price — plus you still owe duties and final delivery. Easy, not always cheap.
DDP — Delivered Duty Paid
The seller handles everything, including import duties, right to your door. Simplest for you, highest price, and you’re trusting the seller to clear customs in your country correctly — which doesn’t always go smoothly.
So which should you use?
For most importers, FOB is the sweet spot: you control the freight and customs through a forwarder you trust, and you see the real costs instead of having them hidden in the unit price. If you’re new and want hand-holding, CIF or DDP can ease you in — just know you’re paying for the convenience.
Not sure which fits your shipment? That’s exactly the kind of thing we sort out on a quote call.
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