When you agree a price with a supplier or buyer, the Incoterm you choose decides who is responsible for the goods — and who pays — at every stage of the journey. Getting it wrong can mean unexpected costs or your cargo sitting at customs while nobody takes responsibility.
The Basics
Incoterms (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce. They define exactly where the seller's responsibility ends and the buyer's begins.
The Three You'll See Most Often
EXW (Ex Works) — The buyer takes on almost everything: pickup from the seller's premises, export clearance, main transport, import clearance, and delivery. The seller's only job is to make the goods available. This gives buyers maximum control but also maximum responsibility.
FOB (Free On Board) — The seller handles everything up to loading the goods onto the vessel at the port of origin. From that point, the buyer takes over: sea freight, insurance, import duties, and final delivery. This is one of the most common terms in sea freight.
CIF (Cost, Insurance, and Freight) — The seller pays for transport and insurance to the destination port, but risk transfers to the buyer once the goods are loaded. The buyer still handles import clearance and delivery from the port.
Why This Matters for First-Time Shippers
Choosing the wrong Incoterm doesn't just affect cost — it affects who is legally on the hook if something goes wrong mid-shipment. A common mistake: assuming "the seller handles everything" under a term like FOB, then being surprised by import duties or last-mile delivery costs.
How We Help
We review the Incoterm on your purchase order or sales contract before the shipment moves, so there are no surprises about who owes what at each stage.