Incoterms
also: Incoterms 2020 · EXW · FOB · DAP · DDP
Standard trade terms published by the International Chamber of Commerce that define who pays for, and bears the risk of, each stage of shipping goods.
Incoterms are three-letter rules written into purchase contracts. The current edition, Incoterms 2020, has 11 rules. Common ones: EXW (Ex Works), where you take responsibility from the seller's premises; FOB (Free On Board), where the seller loads the goods onto the vessel at the named port and risk passes to you there; DAP (Delivered At Place), where the seller delivers to your named destination but you handle import clearance and duties; and DDP (Delivered Duty Paid), where the seller also handles import clearance and duties.
Incoterms decide which costs a quote includes, which you pay separately, and who should insure the goods at each stage. They do not cover payment terms or transfer of ownership.
Where it bites: comparing quotes on different Incoterms without converting them to landed cost, and losing visibility of how goods are declared at customs when the seller handles import.
Founder takeaway
Put the Incoterm and named place on every purchase order, and compare suppliers on landed cost, not quoted price.
engineer review pending