What Incoterms govern.
Incoterms (International Commercial Terms) are standardized trade clauses of the International Chamber of Commerce. They define who, in international trade, organizes transport, bears the costs and from what point the risk passes to the buyer.
They don't replace a contract, but they prevent misunderstandings: a clause like FOB or DDP says in three letters who is responsible for what. The clauses shown here refer to Incoterms 2020.
Five clauses in everyday use.
- Ex WorksEXW
- The buyer takes over the goods at the seller's premises and bears all costs and risks from that point — maximum responsibility lies with the buyer.
- Free On BoardFOB
- The seller delivers on board the ship at the port of shipment; from that point the buyer bears costs and risk. A classic for sea freight.
- Cost, Insurance and FreightCIF
- The seller bears freight and insurance to the port of destination; the risk, however, already passes to the buyer at loading.
- Delivered At PlaceDAP
- The seller delivers to the agreed place at the buyer's; the buyer handles import customs clearance.
- Delivered Duty PaidDDP
- The seller bears everything up to delivery including import customs clearance — maximum responsibility lies with the seller.
Who bears what.
| EXW | FOB | CIF | DAP | DDP | |
|---|---|---|---|---|---|
| Transport | Buyer | shared | Seller | Seller | Seller |
| Import duty | Buyer | Buyer | Buyer | Buyer | Seller |
| Transfer of risk | ex works | on board | on board | at destination | at destination |
| Suitable for | experienced importers | sea freight standard | those handing off sea freight | delivery free to door | fully hassle-free |
Simplified representation per Incoterms 2020 — the specific arrangement belongs in the contract.
Which Incoterm fits you?
The more responsibility you want to hand off, the further right in the table you land: EXW means maximum work on your part, DDP means we deliver duty paid to your door. Those who rarely import are usually more at ease with DAP or DDP.
When in doubt, we advise you and take on as much responsibility as you wish — all the way to complete delivery free to door and duty paid.