Incoterms are the short codes in every international sales contract that decide where the seller's responsibility ends and yours begins. Published by the International Chamber of Commerce and updated as Incoterms 2020, they govern who arranges transport, who pays freight, who insures the cargo and, crucially, who carries the risk if something goes wrong. Choose the wrong one and you can end up paying for freight you thought was included or holding risk you did not know you had. Here are the terms a new importer meets most, and how to think about them.
What an Incoterm does and does not cover
An Incoterm defines the division of cost and risk and the point at which risk passes from seller to buyer. It does not set the price of the goods, choose your payment method or replace a proper contract. Pair the right term with sound payment and trade-finance structuring and clear logistics and freight planning, and the three work together.
EXW (Ex Works)
The seller simply makes the goods available at their own premises. You arrange and pay for everything after that, including export clearance in the seller's country. It looks cheap on the quote and often is not, because you are now managing logistics in a country you may not know. For a first-time buyer sourcing from Turkey, EXW usually shifts more burden onto you than it is worth.
FOB (Free On Board)
The seller gets the goods loaded onto the vessel and handles export clearance; from that point the cost and risk are yours. FOB is a balanced, well-understood choice for sea freight and one we often recommend to buyers who want control of the main shipping leg and a clear handover point at the Turkish port. (For containerised cargo, FCA is technically the more precise term, a nuance we will flag when it matters.)
CIF (Cost, Insurance and Freight)
The seller pays freight and minimum insurance to your destination port. It is convenient, but you inherit the risk earlier than many buyers expect (once the goods are on board at origin), and the insurance cover is often the bare legal minimum. Read exactly what is insured and for how much before you treat CIF as the easy option.
DDP (Delivered Duty Paid)
The seller delivers to your door with everything paid, including import duty and clearance. It is the simplest term for you and usually the most expensive, and it relies entirely on the seller handling customs in your country competently. When that goes wrong, it is your delivery that stalls, so DDP is best reserved for sellers who genuinely know your market.
How to choose the right term
There is no single best Incoterm, only the right one for a given shipment, route and relationship. Ask three questions: who is better placed to arrange each leg, where do you want risk to pass, and does the term hide costs that change the real landed price? A confident buyer often prefers FOB or FCA for control; a cautious first order might justify CIF or DDP for simplicity.
The mistake is treating the Incoterm as a formality copied from the last contract. It interacts with your certificate of origin and duty treatment too, which we cover in trade compliance and documentation, and with the storage and timing concerns in our guide to importing Turkish food.
Frequently asked questions
Which Incoterm is cheapest?
None is cheapest in isolation. EXW and FOB look cheaper on the seller's quote but move cost and effort to you; DDP looks dearer but bundles it in. Compare the full landed cost, not the headline number.
Who arranges insurance under FOB?
You do. Under FOB the risk is yours from the moment the goods are loaded, so arranging adequate cargo insurance for the main voyage is your responsibility, not the seller's.
Can I change the Incoterm after agreeing it?
Only by mutual agreement and ideally before production. Changing terms mid-shipment creates gaps in who is responsible for what, which is exactly where disputes start.
We help clients pick the term that puts cost, control and risk where they actually want them, then coordinate the freight and paperwork to match. If you are unsure which Incoterm fits your next order, talk it through with our logistics desk.