Incoterms (International Commercial Terms) define who — the buyer or seller — is responsible for freight, insurance, customs, and risk at each stage of a shipment. Choosing the wrong Incoterm can lead to unexpected costs or disputes. Here’s what you need to know.
EXW — Ex Works (Most Buyer Responsibility)
Under EXW, the seller simply makes the goods available at their factory gate. The buyer arranges and pays for everything: collection from factory, inland transport, export customs, freight, and import customs.
Best for: Experienced importers with established freight forwarders who want maximum control and potentially lower prices.
FOB — Free on Board (Most Common)
Under FOB, the seller is responsible for delivering goods to the named port and loading them onto the vessel. Risk and cost transfer to the buyer once goods are loaded.
With FOB Mundra or FOB JNPT, Oceanhearrt handles factory-to-port transport, export documentation, and loading. The buyer arranges ocean freight and insurance.
Best for: Most B2B import transactions. Gives buyers control over their freight costs and carrier selection.
CIF — Cost, Insurance and Freight
CIF means the seller quotes a price that includes ocean freight and insurance to the buyer’s named port. Risk still transfers to the buyer when loaded at origin port, but the seller arranges and pays for freight.
Best for: First-time importers who prefer a single all-in price and don’t want to deal with arranging freight.
CNF / CFR — Cost and Freight (No Insurance)
Similar to CIF but without insurance. Popular for lower-value shipments where buyers self-insure or where insurance is arranged separately.
Quick Comparison Table
| Incoterm | Seller Pays | Buyer Pays | Risk Transfer |
|---|---|---|---|
| EXW | Nothing beyond factory gate | Everything | At factory |
| FOB | Factory to port + loading | Ocean freight + insurance + import | At origin port (loaded) |
| CIF | Factory to destination port + insurance | Import duties + inland at destination | At origin port (loaded) |
| CNF | Factory to destination port | Insurance + import duties + inland | At origin port (loaded) |
Need help choosing the right Incoterm for your order? Contact our export team and we’ll walk you through the best option for your specific destination and order size.
