Understanding Incoterms: Who Pays for What, and When

Most disputes we see between buyers and sellers trace back to one thing: nobody agreed, in writing, on exactly where responsibility for the goods changes hands.

Incoterms exist to fix that. In practice, four terms cover the overwhelming majority of shipments we handle: EXW, FOB, CIF, and DDP. Each one moves the line between buyer and seller a little further along the route.

EXW — Ex Works

The seller's only job is to make the goods available at their own facility. Everything else — loading, export clearance, freight, import clearance, delivery — is on the buyer.

FOB — Free On Board

The seller handles everything up to loading the goods onto the vessel at the port of origin. From that point, risk transfers to the buyer.

CIF — Cost, Insurance, and Freight

Similar to FOB, but the seller also arranges and pays for main freight and minimum insurance to the destination port.

DDP — Delivered Duty Paid

The seller handles literally everything, including import duties, and delivers to the buyer's door. This is the term we see buyers ask for most often — and the one sellers should price most carefully.

The right term for your shipment depends less on convention and more on who's better positioned to manage risk at each leg. That's usually a conversation worth having before the purchase order, not after.

Whichever Incoterm applies to your order, our team can walk through the practical implications before you commit — request a quote and we'll confirm shipping terms as part of the proposal.