What Are Incoterms?
Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce. They define the responsibilities of buyers and sellers in international transactions — specifically who pays for transport, insurance, and customs at each stage.
FOB — Free On Board
Most common for experienced importers. The seller delivers goods to the port of shipment and loads them onto the vessel. From that point, the buyer assumes all costs and risks.
- Seller pays: factory to port, export customs, loading
- Buyer pays: ocean freight, insurance, import customs, delivery to warehouse
- Best for: buyers who have their own freight forwarder or want to control shipping costs
CIF — Cost, Insurance, and Freight
Popular for first-time importers. The seller covers cost, insurance, and freight to the destination port. However, risk transfers to the buyer once goods are loaded at origin.
- Seller pays: everything to destination port including insurance
- Buyer pays: import customs, unloading, delivery to warehouse
- Best for: buyers who want a simpler quote with fewer variables
DDP — Delivered Duty Paid
The "all-in" option. The seller handles everything from factory to the buyer's door, including import duties and taxes. Maximum convenience, but usually at a premium price.
- Seller pays: everything including import customs and delivery
- Buyer pays: nothing beyond the quoted price
- Best for: small orders, dropshipping, or buyers who want zero logistics hassle
Which Should You Choose?
For orders over $5,000, FOB usually saves money because you control the freight. For smaller orders or your first shipment, CIF or DDP reduces complexity. Ask your DistroUSA sourcing advisor which term makes sense for your specific order.