Let’s talk about Incoterms—those three-letter codes determine who’s responsible for what in an international shipment. At Coppersmith, we’ve spent nearly a century helping importers and exporters get this part right, because when Incoterms are misunderstood, the consequences aren’t just annoying—they’re expensive.
Short for International Commercial Terms, the International Chamber of Commerce publishes and updates Incoterms every ten years. The latest version—Incoterms 2020—includes 11 terms that define which party handles costs, risk, and logistics at every point in the shipping process.
And yet? A 2023 survey by Freightos found that over 45% of small and mid-sized importers couldn’t accurately define the Incoterms on their own invoices.
Quick Breakdown of the Most Common Incoterms:
EXW (Ex Works): The buyer takes on all costs and risks from the seller’s location forward. You’re in the driver’s seat, but you’re also responsible from the start.
FOB (Free on Board): Seller handles export clearance and delivery to the vessel; buyer takes it from there—still one of the most-used for sea freight.
CIF (Cost, Insurance, and Freight): Sellers pay the cost, insurance, and freight to the destination port—but not beyond—risk transfers at the ship rail.
DAP (Delivered at Place): The seller pays to deliver the goods to the named place, but doesn’t cover import duties or taxes.
DDP (Delivered Duty Paid): Seller covers everything—including import clearance and duties. Great for buyers who want a hands-off delivery.
The other terms (FCA, CPT, CIP, FAS, CFR, and DPU) cover various tweaks in who arranges what, but if you’re not crystal clear on these terms, you’re likely overpaying or under-protecting your shipment.
According to the ICC, over 80% of global trade transactions use Incoterms, but less than 40% of importers negotiate the terms they want. That means most accept the default and hope it works.
Why It Matters Now
In today’s climate of shifting tariffs, freight volatility, and complex Customs rules, choosing the right Incoterm isn’t just best practice—it’s protection. It defines the line between “our problem” and “their problem.” It needs to match your risk tolerance, budget, and operations.
“It is important for importers to be familiar with the Incoterms to better tailor their purchase needs to their business model. The attached document explains which party is responsible for what part of the selling, purchasing, and logistics process.”
– Victoria Lane, Chief Compliance Officer, Coppersmith Global Logistics
At Coppersmith, we help clients understand their Incoterms and use them as tools to manage cost, control risk, and make smarter trade decisions.
If you’re unsure what your current term means—or if it’s still the best one for your business—it’s time to check. Because in global logistics, clarity isn’t a luxury. It’s the baseline.
Let’s review your terms and build your next shipment on solid ground.
