Whether you’re importing raw materials or sourcing finished products globally, Incoterms are essential for smooth, dispute-free transactions. They define who is responsible for shipping, insurance, customs clearance, and risk at every stage of a shipment.
In this guide, you’ll learn:
✅ What buyers are responsible for under different Incoterms
✅ What suppliers are expected to do
✅ Which Incoterms are now obsolete (and should be avoided)
What Are Incoterms?
Incoterms (International Commercial Terms) are a set of rules published by the International Chamber of Commerce (ICC) to clarify buyer and seller obligations. The latest version is Incoterms 2020.
Buyer Responsibilities Under Key Incoterms
Below is a simplified visual overview to help you understand where buyer responsibility starts and ends:
📊 Incoterms Responsibility Chart
| Incoterm | Export Customs | Main Carriage | Insurance | Import Customs | Final Delivery |
|---|---|---|---|---|---|
| EXW | Buyer | Buyer | Buyer | Buyer | Buyer |
| FOB | Seller | Buyer | Buyer | Buyer | Buyer |
| CIF | Seller | Seller | Seller | Buyer | Buyer |
| DAP | Seller | Seller | Seller | Seller | Buyer |
Key takeaway: The earlier the transfer of responsibility, the more you — as the buyer — must coordinate (and bear risk).
Supplier Responsibilities
Depending on the agreed Incoterm, suppliers may be expected to:
- Prepare goods: Packaging, labeling, and marking
- Handle export procedures: Export licenses, customs clearance
- Arrange loading and main transport: In terms like FOB, CIF, DAP
- Provide documentation: Commercial invoice, packing list, certificate of origin, bill of lading
💡 Tip for buyers: Always confirm in writing what documents your supplier will provide and what insurance coverage (if any) is included.
Obsolete Incoterms to Avoid
Several Incoterms were officially removed in the 2010 revision and are no longer used in Incoterms 2020. You might still see these in outdated contracts:
🚫 DAF (Delivered at Frontier)
🚫 DES (Delivered Ex Ship)
🚫 DEQ (Delivered Ex Quay)
🚫 DDU (Delivered Duty Unpaid)
Using these obsolete terms can create legal uncertainty and complicate customs processes.
Example Scenario
Case study: A European buyer orders machinery from a Chinese supplier under FOB Shanghai.
- Supplier’s job: Handle export clearance, deliver and load goods on board in Shanghai.
- Buyer’s job: Arrange sea freight, pay insurance (optional under FOB), handle import clearance, and transport to the final site.
⚠️ Common mistake: Assuming “FOB” means the supplier covers all costs until arrival at your warehouse. In reality, your risk starts once goods are loaded at the port of origin!
✅ Download Your Free Incoterms Checklist
To make this easier, we’ve created a free downloadable checklist covering:
- Buyer & supplier responsibilities by term
- Risk transfer points
- Key documents needed
👉 Download Incoterms Checklist (PDF)
Final Thoughts
Choosing the right Incoterm can help you avoid costly misunderstandings, unexpected fees, and delays. Stay updated (use Incoterms 2020 only), clearly define responsibilities, and keep close communication with your suppliers.
Need help reviewing your contracts or negotiating with suppliers? Contact us today — our trade compliance experts can guide you step by step.