Incoterms rules are published by the International Chamber of Commerce and are revised periodically; the current set should be named explicitly in a contract rather than assumed. Each rule allocates three things between buyer and seller: cost, responsibility for arranging transport, and the point at which risk of loss transfers.

The Four Most Used Terms Compared

TermWho arranges main transportRisk transfersBest suited to
EXWBuyerAt the seller's premises, on collectionBuyers with their own forwarder and local presence
FOBBuyerWhen goods are loaded on board the vesselSea freight with a buyer-nominated forwarder
CIFSellerWhen goods are loaded on board, though the seller pays carriage to destinationBuyers who want transport arranged but accept early risk transfer
DDPSellerAt the destination, delivered and clearedBuyers wanting minimal logistics involvement

Note the subtlety in CIF: the seller pays for carriage to the destination port, but risk passes when the goods are loaded. If something happens in transit, the buyer typically bears the loss while the seller holds the insurance documents — which is why insurance arrangements matter under that term.

Finished cases protected in cartons for export
Where the term transfers risk is also where damage responsibility sits.

Choosing a Term

  • Do you have a reliable forwarder? If yes, FOB usually gives better cost control than CIF.
  • Do you know destination clearance well? If not, DDP removes a significant administrative burden.
  • Is the cargo high value? Then where risk transfers matters more than who books the vessel.
  • Is the lane stable? Stable lanes reward owning the freight relationship; intermittent shipments do not.
Cases staged in warehouse storage before loading
Consolidation and container planning are what turn a freight quote into a real per-unit cost.

Sea or Air

FactorSea freightAir freight
CostMuch lower per unitSubstantially higher
Transit timeWeeksDays
Volume suitabilityLarge, heavy, bulky shipmentsUrgent, lighter, high-value shipments
Key planning issueLead time and container utilisationChargeable weight and schedule

For protective cases, volume is often the constraint: cases are bulky relative to their weight, so container utilisation drives the per-unit cost. Our article on stackability and pallet planning addresses that directly, and HS codes and export documents covers the paperwork that accompanies the shipment.