6 min read · 2026-06-19
Incoterms® are international trade rules published by the International Chamber of Commerce (ICC). The current version is Incoterms® 2020. The rules define exactly when risk, cost, and responsibility transfer from the seller (exporter) to the buyer (importer) across 11 standardized trade terms.
EXW (Ex Works) is the most favorable term for the seller. The exporter is responsible only until the goods are available at their premises. All transportation, customs clearance, and insurance from that point forward are the buyer's responsibility. It is simple for inexperienced exporters but places a heavy burden on the importer.
FOB (Free On Board) is one of the most widely used terms in practice. The seller bears responsibility until the goods are loaded onto the vessel at the named port of shipment. After that, sea freight and insurance are the buyer's cost. Many SME exporters prefer FOB because logistics quotes are clear and manageable.
CIF (Cost, Insurance and Freight) means the exporter covers freight and insurance to the destination port; the importer handles customs clearance on arrival. It is more convenient for buyers but complicates cost estimation for sellers — especially when sea freight rates fluctuate — so factor that into your pricing.