The Procurement Glossary » Incoterms

Incoterms

Inventory & Logistics

Also known as: International Commercial Terms

Definition

Standard international trade terms defining who is responsible for shipping, insurance, duties and risk at each point of a delivery.

Explanation

Incoterms (e.g. EXW, FOB, CIF, DDP) precisely allocate cost and risk between buyer and seller in cross-border trade, avoiding disputes over who pays for and bears risk on transport at each leg.

Example

Buying DDP, the supplier bears all cost and risk to the buyer's door, including duties.

Related terms

• Freight — The transport of goods and the charge for that transport.
• Logistics — The management of the movement and storage of goods — transport, warehousing, handling and delivery.
• Customs Duty — A tax levied by a government on goods imported across its borders.
• Landed Cost — The total cost of a product delivered to the buyer's door, including price, freight, insurance, duties and handling.

Frequently Asked Questions

What is Incoterms?

Standard international trade terms defining who is responsible for shipping, insurance, duties and risk at each point of a delivery. Incoterms (e.g. EXW, FOB, CIF, DDP) precisely allocate cost and risk between buyer and seller in cross-border trade, avoiding disputes over who pays for and bears risk on transport at each leg.

Can you give an example of Incoterms?

Buying DDP, the supplier bears all cost and risk to the buyer's door, including duties.

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