Incoterms define exactly where the seller's responsibility ends and yours begins. Get the term wrong and you can find yourself liable for a container sitting on a quay accruing demurrage you never budgeted for.
The four groups
E group (EXW) — the seller does the least. The goods are available at their premises and everything after that is yours, including export clearance.
F group (FCA, FAS, FOB) — the seller delivers to a carrier you nominate, without paying the main carriage.
C group (CFR, CIF, CPT, CIP) — the seller pays the main carriage, but risk still transfers at origin. This is the one that catches people out.
D group (DAP, DPU, DDP) — the seller bears cost and risk to the named destination.
Mistake one: assuming CIF means the seller carries the risk to your port
Under CIF the seller pays freight and insurance, but risk transfers when goods cross the ship's rail at origin. If the cargo is damaged mid-ocean, it is your claim to make against the policy — not the seller's problem.
Mistake two: using FOB for container shipments
FOB was written for break-bulk cargo loaded over a ship's rail. For containers handed over at a terminal days before loading, FCA is the correct term. Using FOB leaves an ambiguous gap where neither party clearly holds the risk.
Mistake three: accepting DDP without checking your import obligations
DDP makes the seller responsible for import duty and clearance — but in many jurisdictions a non-resident seller cannot legally act as importer of record. The shipment stalls at customs while both parties discover this together.
Practical guidance
For first-time relationships, CIF or CFR to your nearest major port gives you cost visibility without handing the supplier control of your inland leg. Once you trust the relationship and know your own freight rates, FCA usually costs less.
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