EXW, FOB, CIF and DDP: four INCOTERMS that every exporter should master

Not all INCOTERMS entail the same level of responsibility or cost. Choosing the wrong one can directly affect the profitability of a transaction. Below, we analyze four of the most commonly used:

EXW (Ex Works)
The seller fulfills their obligation by making the goods available to the buyer at their facilities. From that point, the buyer assumes all costs and risks. Ideal for transactions in which the buyer controls complete logistics.

FOB (Free On Board)
Used exclusively for maritime transport. The seller delivers the goods on board the vessel designated by the buyer, transferring the risk at that time. Not recommended for containerized cargo, where FCA (Free Carrier) is generally preferred.

CIF (Cost, Insurance, and Freight)
The seller contracts ocean freight and insurance up to the port of destination. However, the risk is transferred when the goods are loaded onto the vessel. This is a common option in bulk or conventional cargo operations.

DDP (Delivered Duty Paid)
The seller assumes all costs and risks until final delivery in the buyer's country, including duties, taxes, and VAT. This term offers the greatest security for the buyer, but also the greatest commitment for the seller.

At Dragón de Fuego, we help companies determine the most advantageous INCOTERM for their logistics strategy, considering risks, costs, and customs obligations.