Understanding Incoterms 2020: A Practical Guide for Importers

Incoterms (International Commercial Terms) are a set of predefined commercial terms published by the International Chamber of Commerce that clearly define the responsibilities of buyers and sellers in international trade transactions.

Most Common Incoterms

FOB (Free on Board)

FOB means the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The risk transfers to the buyer once the goods are on board the ship.

Best for: Experienced importers who want control over shipping logistics and costs.

CIF (Cost, Insurance, and Freight)

CIF means the seller delivers the goods on board the vessel and must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also insures the goods.

Best for: Buyers who prefer a simpler arrangement with less logistical involvement.

DDP (Delivered Duty Paid)

DDP means the seller delivers the goods to the buyer cleared for import and ready to unload at the named place of destination. The seller bears all costs and risks.

Best for: First-time importers who want a hassle-free, door-to-door experience.

Choosing the Right Incoterm

The best Incoterm depends on your experience level, order volume, and how much control you want over the logistics process. We recommend discussing options with your supplier to find the arrangement that works best for both parties.

Need help navigating international trade terms? Our team is always happy to explain your options. Get in touch.