Incoterms Uncomplicated

Why Incoterms matter

Incoterms are standard three-letter rules that define exactly who is responsible for cost, risk and paperwork at each stage of a shipment.

The terms you'll use most

• EXW — buyer does almost everything from your gate
• FOB — you deliver to the ship; risk passes there
• CIF — you cover cost, insurance and freight to destination port
• DAP/DDP — you deliver to the buyer, DDP including duties

How to choose

Beginners often start with FOB — it's simple and limits your risk. CIF can win buyers who want an all-in price.

Only quote DDP if you fully understand the destination country's duties and clearance.

Common Incoterm mistakes

• Quoting CIF but budgeting like FOB
• Not stating the named port or place
• Assuming insurance is included when it isn't