3 Popular Incoterms Explained

3 Popular Incoterms Explained

If you are reading this article, you are probably wondering: what are “Incoterms” and how do they affect me as a consumer? In an increasingly globalized economy, there is a strong need for transparency and clarity when dealing with international transactions. For many years, "Incoterms" have helped buyers and sellers clarify the terms of their transactions, and achieve more transparent trading partnerships.

To keep it simples, “Incoterms” are a set of rules, which were instituted by the International Chamber of Commerce (also known as ICC). These rules, or “International Commercial Terms,” are quite important, because they are a standard for many international commercial transactions and sales practices. Incoterms are used so widely in the logistics sector, read on to learn more about three popular ones.


Meaning “Ex Works,” this Incoterm means that buyers take full responsibility for the transport of merchandise. The seller’s obligation is to make the items available at the agreed time and location. An example? When you buy a product, and you also cover the cost of shipping.


This Incoterm means “Cost, Insurance, and Freight.” Essentially, the seller, in this case, is responsible for providing item insurance. It is not very common in retail orders directed to the customer, but it is a fairly common arrangement for wholesale orders and bulk shipments.


“Carriage and Insurance Paid.” In this particular situation, a seller would assume full responsibility for the entire transport chain, up to the destination.

These are only three of the most popular Incoterms out there. The list of Incoterms is constantly updated, with periodic revisions. It is amazing to think that Incoterms have been in use ever since the 1930s, and have been governing international trading with more clarity and transparency, for the benefits of both parties involved (sellers and buyers).

For more information on Incoterms, take a look at our recent article: "The Smart Shipper's Guide to Incoterms" or check out the Infographic.