Understanding Incoterms® 2020
Incoterms® 2020 define buyer and seller responsibilities in international trade. They clarify cost sharing, delivery obligations and the point at which risk transfers from seller to buyer.
EXW vs DDP: Two Extremes
EXW (Ex Works): Seller simply makes goods available; buyer covers all transport, export and import duties.
DDP (Delivered Duty Paid): Seller handles every cost and risk until goods reach buyer’s door.
Risk Transfer Points
- EXW: Risk transfers at the seller’s premises.
- FOB: Risk transfers when goods are loaded on the ship.
- CIF: Seller pays freight/insurance but risk transfers once cargo is aboard.
- DDP: Risk transfers only at buyer’s destination.
Recommendations by Cargo Type
Bulk Commodities: FOB or CFR allow buyers to control ocean freight and insurance.
Containerized Goods: CIF or CIP balance cost and insurance for higher-value shipments.
Door-to-Door Consumer Goods: DDP simplifies delivery for e-commerce and retail supply chains.
Best Practices
- Match the Incoterm to cargo type, routes and customs complexity.
- Define obligations clearly in sales contracts.
- Review Incoterms updates to stay compliant and competitive.
Conclusion: Choosing the correct Incoterm—from EXW to DDP—helps manage risk, control costs and ensure smooth global shipping. For expert guidance and container transport Mersin solutions, partner with Blue Alfa Logistics.