Understanding Incoterms: A Practical Guide for Importers

What Are Incoterms?

Incoterms (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international trade.

The Most Common Terms

FOB (Free On Board): Seller is responsible until goods are loaded on the vessel. After that, risk transfers to the buyer.

CIF (Cost, Insurance, Freight): Seller covers cost, insurance, and freight to the destination port.

DDP (Delivered Duty Paid): Maximum responsibility for the seller — they handle everything including import duties at destination.

Choosing the Right Term

For new importers, DDP offers simplicity. For experienced buyers with preferred freight partners, FOB often yields better cost control.