What Are Incoterms? EXW, FOB, & DDP Explained

International trade terms commonly known as

incoterms

are terms used to establish responsibilities between the buyer (usually the brand owner) and the seller (usually the manufacturer). These responsibilities help reduce confusion between buyers and sellers about who has financial responsibility for various logistics processes. components of the cargo, these terms also describe who is responsible for the security of the goods and when that responsibility is transferred By getting the goods on the ship at the port and delivery duties paid, known as DDP, the seller is responsible for taking the goods to the final destination chosen by the buyer. These are the most commonly used terms, as they offer the simplest explanation of each part.

Responsibilities Manufacturers' initial prices are often quoted as ex-factory or free on board once final destination is provided by the buyer. Sellers can generally provide delivered, tax-paid prices, for example, if the seller quotes a product at one dollar fob and the buyer purchases at that price. You are then responsible for paying all freight costs to the final destination, usually through a freight forwarder hired by the buyer, the buyer also pays customs and clearance duties separately and must have their own import bond; However, if the buyer purchases the product from the seller at a delivery duty price in dollars and 80 cents, then the seller is responsible for all costs and logistical coordination associated with transporting the product to the final destination, including customs duties and clearance.

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