Five Incoterms mistakes that cost importers real money
From EXW surprises to DDP tax exposure — the terms that quietly shift risk and cost onto the wrong party.
Incoterms decide who pays for what, where risk transfers, and who handles customs — and choosing them casually is one of the most expensive quiet habits in international trade. Five mistakes we correct most often:
One: buying EXW without understanding origin costs. Ex Works makes the buyer responsible from the seller's door — including export formalities in a country where the buyer has no presence. FCA achieves similar control with the seller handling export clearance.
Two: buying CIF and assuming the freight is a good deal. Under CIF the seller controls (and marks up) the ocean freight, and risk still transfers to the buyer at origin loading. Buyers often pay more freight than they would buying FOB and booking through their own forwarder — without gaining any protection.
Three: selling or buying DDP without a tax plan. Delivered Duty Paid makes the seller the importer in the buyer's country — triggering registration, duty and tax obligations sellers rarely anticipate. E-commerce sellers using DDP deliberately can make it work; industrial sellers stumbling into it usually cannot.
Four: ignoring the insurance gap. Only CIF and CIP oblige the seller to insure — and only at minimum cover. Every other term leaves insurance to whoever holds the risk, which is frequently nobody until a claim reveals it.
Five: leaving the term off the contract or using retired terms. 'FOB destination' is not an Incoterm; ambiguity becomes a dispute exactly when money is on the line. State the term, the named place, and the version — Incoterms 2020 — on every quote and invoice.
General information, not advice for a specific transaction — trade rules change and details depend on your goods and lanes. Ask our team about your situation, or request a quote.