EXW, FOB, CIF, DDP eleven terms decide who pays for what and where risk changes hands. Here are the ones that matter for importers, without the legalese.
What are Incoterms?
Incoterms (International Commercial Terms) are eleven standardized three-letter terms published by the International Chamber of Commerce. Each one defines exactly where the seller's responsibility ends and the buyer's begins: who arranges transport, who pays which charges, and where risk transfers.
The Incoterms you'll actually use
EXW - Ex Works
You (the buyer) take over at the seller's door. Maximum control, maximum responsibility: you arrange everything including export formalities. Only choose it if your forwarder can operate at origin.
FOB - Free On Board
The classic ocean term. The seller delivers the goods on board the vessel and handles export clearance; you pay ocean freight onward. Clean split, widely used for container shipping.
CIF - Cost, Insurance and Freight
The seller pays freight and minimum insurance to the destination port, but risk transfers when goods are on board at origin. Convenient-looking, but you inherit the seller's carrier choices and often pay hidden margin in the freight.
DAP / DDP - Delivered At Place / Delivered Duty Paid
The seller delivers to your named place; under DDP they also clear import and pay duties. Simple for the buyer, but duty handling by a foreign seller often goes wrong, verify who actually acts as importer of record.
Quick comparison
| Term | Seller handles | Buyer handles | Risk transfers |
|---|---|---|---|
| EXW | Makes goods available | Everything else | Seller's premises |
| FOB | To on board + export clearance | Ocean freight onward | On board vessel |
| CIF | Freight + min. insurance to port | Import clearance, onward | On board vessel |
| DDP | Everything incl. import duties | Receiving | At named place |
Which Incoterm should an e-commerce importer choose?
For most growing importers, FOB hits the sweet spot: the supplier handles their own country's export process, and your forwarder controls the freight, giving you rate transparency and one accountable partner from port to door. Avoid EXW unless you have origin capabilities, and treat supplier-quoted CIF/DDP prices with healthy skepticism, ask for the FOB price and compare.
BLS tip: whatever term you agree, write it with the location ("FOB Miami", "DAP Iquique") an Incoterm without a named place is half a contract.
