Insights · Guide
Incoterms in plain language
Who arranges and pays for what between factory and destination.
Incoterms are standard trade terms published by the International Chamber of Commerce (the current edition is Incoterms 2020). They describe which tasks, costs and risks sit with the seller and which with the buyer during delivery.
A few you will often see
- EXW (Ex Works): the seller makes goods available at their premises; the buyer handles almost everything else.
- FOB (Free On Board): used for sea freight. The seller delivers goods onto the ship at the named port of loading; the buyer handles the main freight from there.
- CIF (Cost, Insurance and Freight): the seller pays main sea freight and minimum insurance to the destination port, but risk passes to the buyer once goods are on board at origin.
- DDP (Delivered Duty Paid): the seller delivers to the named destination and handles import clearance and duties. Less common for US importers, who are often the importer of record.
Why it matters
Two quotes with different Incoterms are not directly comparable. An FOB price and a CIF price for the same product cover different costs. Check which Incoterm, and which named place, a quote uses.
This guide is general information to help you get started. It is not legal, tax or customs advice. For your specific situation, consult a licensed customs broker or adviser, or talk to our team.