What are Incoterms?
Incoterms are the standard trade terms published by the International Chamber of Commerce. They define who is responsible for costs, risks, and documents at every step of an international shipment. Choosing the wrong term can add thousands of dollars to a deal or leave your cargo uninsured at the exact moment something goes wrong.
The four terms you will use most
Term Seller delivers Buyer takes risk Best for
--- --- --- ---
EXW At the seller''s factory gate From the factory Experienced buyers with local agents
FOB Loaded on the vessel Once on board Sea freight, bulk goods
CIF Destination port, insured Once on board Buyers who want freight handled
DDP Buyer''s door, duties paid At delivery Buyers who want zero logistics work
How risk shifts across the journey
:::chart Where risk transfers (typical sea shipment)
EXW - at factory | 10
FOB - on vessel | 40
CIF - on vessel | 40
DDP - at your door | 95
:::
Common mistakes to avoid
- Using EXW without an agent in the seller''s country — export clearance becomes your problem.
- Assuming CIF covers all insurance — it only requires minimum coverage.
- Forgetting that DDP makes the seller the importer of record — not all sellers can do this in your country.
> Rule of thumb: the more the seller does for you, the higher the price and the lower your risk.
How Prebro helps
On Prebro, every deal room records the agreed Incoterm, and the freight engine matches your shipment with forwarders who quote on exactly that term — so the price you compare is the price you actually pay. Start your next deal at prebro.com and pick the term with full clarity.