Incoterms define where the seller’s responsibility ends and the buyer’s begins: who books the freight, who insures it, who clears customs and, crucially, where the risk of loss transfers. Choosing the wrong term is one of the most common and expensive mistakes we see in new import relationships.
The terms importers use most
- EXW (Ex Works): you take over at the supplier’s door and handle everything, including export clearance. Maximum control, but you are responsible for formalities in a country you may not know.
- FCA (Free Carrier): the seller delivers export-cleared goods to your nominated carrier. The modern replacement for EXW and our usual recommendation for containerised cargo.
- FOB (Free On Board): the seller loads the goods on the vessel; risk transfers on board. Technically for bulk and breakbulk only, but still widely used for containers.
- CIF / CFR: the seller arranges and pays for freight (and minimum insurance under CIF), but risk still transfers at origin. Popular with suppliers because it hides the freight margin.
- DAP / DDP: the seller delivers to your door; under DDP they also pay import duties and VAT. Convenient, but you lose visibility and control of the import declaration.
What we recommend
For most importers, FCA gives the best balance: the supplier handles export formalities in their own country, and you control the freight, insurance and import process through your forwarder. Avoid CIF for containerised cargo unless you have checked the freight and insurance terms in detail.
Risk transfers at origin under CIF even though the seller pays the freight. Many buyers only discover this when a claim is refused.
Jeroen Bakker, Head of Customs & Compliance
