Incoterms
Incoterms (short for International Commercial Terms) are the most widely recognized and authoritative set of trade terms used in international commerce today. Published by the International Chamber of Commerce (ICC), these rules provide a standardized framework that defines the responsibilities of buyers and sellers in global trade — including who arranges transportation, handles insurance, bears risks, and pays for costs at each stage of the shipment.
The latest version is Incoterms 2020.
Common Incoterms
EXW – Ex Works (... named place of delivery)
The seller makes the goods available at their premises or another specified location. The buyer bears all transportation costs and risks from that point onward.
FOB – Free on Board (… named port of shipment)
The seller delivers the goods on board the vessel nominated by the buyer at the named port. Risk transfers to the buyer once the goods are on board.
CIF – Cost, Insurance & Freight (… named port of destination)
The seller pays for cost, insurance, and freight to the destination port. However, risk transfers to the buyer once the goods are loaded on the vessel.
DAP – Delivered at Place (… named place of destination)
The seller is responsible for delivering the goods to the named destination, ready for unloading. Risk remains with the seller until the goods are placed at the buyer’s disposal.
DDP – Delivered Duty Paid (… named place of destination)
The seller assumes all costs and risks involved in delivering the goods to the final destination, including import duties and taxes.
DDU – Delivered Duty Unpaid (Legacy Term)
DDU means the seller delivers the goods to the named place in the buyer’s country, handling transportation and import clearance, but the buyer pays import duties and taxes.
Note: DDU was officially removed from Incoterms in 2010. However, it is still widely used in practice.
| Term | Delivery Location | Seller's Responsibilities | Buyer's Responsibilities |
|---|---|---|---|
| EXW | Seller's premises | Make goods available, packaging | All transport, export/import clearance, duties |
| FOB | Port of shipment (on board ship) | Domestic transport, export clearance, loading on vessel | Sea freight, insurance, import clearance |
| CIF | Destination port (on board ship) | Freight, export clearance, loading, minimum insurance | Import clearance, inland transport |
| DAP | Named place of destination | All transport and risk until goods are ready for unloading | Unloading, import clearance, duties |
| DDP | Named place of destination | All costs and risks, including import duties and taxes | Receive goods |
| DDU | Named place of destination | Delivery to destination, import clearance | Payment of import duties and taxes |
Why Choose DDP (Delivered Duty Paid)?
DDP is the most buyer-friendly Incoterm. It means the seller is responsible for all costs and risks involved in delivering the goods to the buyer’s location — including export and import duties, customs clearance, transportation, and insurance.
Benefits of Choosing DDP:
- No surprises — the buyer pays one clear price with no hidden costs.
- Hassle-free import — the seller handles all customs procedures and paperwork.
- Less risk and effort for the buyer — everything is delivered ready-to-use.
Special Guarantee:
For all goods sold under DDP with payment completed, we absorb any price adjustments caused by changes in import duties or taxes. That means no extra charges, even if tariff rates increase after your order is placed.