Incoterms
A standardized set of international trade terms - like FOB or DDP - defining exactly when shipping cost and risk transfer from seller to buyer.
In practice
Different terms shift the line at different points - EXW puts almost all responsibility on the buyer starting at the seller's door, while DDP puts nearly all of it on the seller until the goods arrive at the buyer's destination - so the choice materially affects landed cost and risk exposure.
A contract specifies FOB Shanghai, meaning the seller's responsibility ends once the goods are loaded onto the ship, and the buyer takes on risk and cost from that point forward.
Why it matters
Choosing the wrong Incoterm for a business's actual capabilities - like agreeing to DDP without in-house customs expertise - can turn what looked like a good unit price into a logistics headache.
Worth knowing
- Updated periodically by the International Chamber of Commerce - the current version should be referenced.
- EXW gives the seller the least responsibility; DDP gives them the most, covering the buyer's door.
- The choice directly affects landed cost, since it determines who pays for freight, insurance, and duty.
Related terms
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Let's talk it through
Tell us where things stand with putting incoterms into practice and we'll respond with next steps, no forms, no waiting in a queue.
- A specialist replies directly, not a support queue
- Whichever channel is fastest for you, call, WhatsApp or email
- No long-term contract to start the conversation
