Incoterms define exactly where responsibility for cost, risk, and logistics shifts from seller to buyer during an international shipment. Getting this wrong on a quote can turn an otherwise profitable order into a loss, so it's worth understanding the handful of terms used most often in container freight.
Under EXW (Ex Works), the buyer takes on responsibility from the seller's factory door onward, including export clearance — it puts the least logistics burden on the seller but the most on the buyer.
FOB (Free On Board) shifts responsibility to the buyer once goods are loaded onto the vessel at the origin port, making the seller responsible for domestic transport and export clearance up to that point.
CIF (Cost, Insurance and Freight) goes a step further: the seller also arranges and pays for main carriage and insurance to the destination port, though risk still transfers once goods are on board.
DDP (Delivered Duty Paid) puts nearly all responsibility, including destination-country import duties, on the seller — it's the most convenient term for the buyer, and should be quoted accordingly.
Always confirm which Incoterm a quote is based on in writing before production starts; it directly affects the final landed cost on both sides.