Incoterms
Incoterms are standardized trade terms defining where seller responsibility ends and buyer responsibility begins.
What Incoterms are
Incoterms are the standardized trade terms published by the International Chamber of Commerce defining, in three-letter codes, where a seller’s responsibility ends and a buyer’s begins: who pays freight, who carries risk, who clears customs, at which point.
Why Incoterms matter
A supplier quote means little until the term is known: the same unit price under EXW and DDP are entirely different deals, with freight, insurance, and duty landing on different sides. The term is part of the price.
Terms importers meet most
- EXW, ex works: buyer takes over at the factory door
- FOB, free on board: seller delivers onto the vessel
- CIF: seller covers cost, insurance, freight to destination port
- DDP, delivered duty paid: seller handles everything to the door
Frequently asked questions
Which Incoterm should a small importer use?
Commonly FOB with their own forwarder handling the main leg: it keeps freight control and visibility without managing the origin country’s inland logistics. EXW hands you everything; DDP hides everything in the price.
Do Incoterms apply to parcels to customers?
Conceptually: the duties-paid versus duties-unpaid choice on international orders is the same responsibility question, deciding whether the customer meets a surprise bill at the door.