Every freight quote starts with three letters, and most arguments about a shipment end with them. Incoterms say who pays for each leg of the journey and, more importantly, who carries the risk when something goes wrong. There are eleven of them. In practice four cover nearly every load we move.

EXW and FCA

Under EXW the buyer collects from the seller's door and owns every problem from that moment, including export clearance in a country where the buyer may have no standing. FCA fixes that: the seller clears the goods for export and hands them to the buyer's carrier at a named place. If you are buying, ask for FCA rather than EXW. It costs the seller very little and saves you a great deal.

FOB and CIF

These two belong to sea freight only. With FOB the seller's job ends when the goods are on board the ship, and the buyer books and pays for the voyage. With CIF the seller books the ship and a basic insurance, yet the risk still passes to the buyer at the port of loading. Many buyers believe CIF means the seller carries the goods safely to them. It does not.

DAP and DDP

The seller delivers to the buyer's door. Under DAP the buyer clears customs and pays the duty; under DDP the seller does both. DDP sounds generous, but a seller with no tax registration in your country cannot always complete it, and the load waits at the border while that is discovered.

• Write the term and the named place on the order: «FCA Rotterdam, Waalhaven shed 4»
• Insure the leg where the risk is yours, not the leg you pay for
• Use FOB and CIF for the sea only; for containers FCA and CIP fit better

The cheapest term on the quote is often the dearest one at the border.

If you are unsure which term suits a lane, send us the order before you sign it. Ten minutes then is worth a week later.