What is Incoterms (FOB, EXW, CIF, DDP)?

Incoterms are standard trade terms that define who pays for and is responsible for each stage of shipping. FOB: supplier delivers onto the ship; EXW: you collect from the factory; CIF: supplier pays freight and insurance to your port; DDP: supplier delivers duties paid.

Example

A FOB Shenzhen quote means you pay ocean freight, insurance, duty and delivery from the port onward.

Why it matters

Two quotes with different Incoterms aren’t comparable until you add the costs each one leaves out.

Calculate it: Landed Cost Calculator

True per-unit cost with freight and duty

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Flashcard

Question

What is incoterms (FOB, EXW, CIF, DDP)?

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Answer

Standard trade terms that set who pays for each stage of shipping — e.g. FOB (onto the ship), EXW (from the factory), CIF (freight + insurance to your port), DDP (duties paid).

Related terms

Landed cost

Landed cost is the total cost of getting a product to where you sell it: product cost + freight + insurance + duties + customs and other fees.

CBM

CBM is the volume of a shipment in cubic meters (length × width × height in meters). Sea and air freight are priced on volume and weight.

Read more in our guide: How to Calculate Landed Cost (With a Worked Example)