Incoterms

Incoterms definition, the two most-used incoterms and when to use them.

Incoterms (International Commercial Terms) are a standardized set of rules developed by the International Chamber of Commerce. These are recognized worldwide for sales contracts in international trade. Incoterms are agreed on between you and your factories (or suppliers, sellers). Currently there are 11 three-letter terms that define the responsibility for the cost of shipping, insurance, duties, and taxes; the point of collection and delivery of the goods; and on whom the responsibility for the goods rests during each point in transit. You can download the explanation (with visuals) of the incoterms here.

The most commonly used incoterms especially among new shippers and small & medium-sized businesses are FOB and Ex-Work.

For a detailed explanation of the pros and cons when using FOB vs. Ex-Work, check out this article: Incoterms - which one should I use?