When shipping goods internationally, clear responsibility boundaries are essential. That’s where Incoterms (International Commercial Terms) come in. Incoterms are standardized trade rules published by the International Chamber of Commerce (ICC) to define the responsibilities of buyers and sellers during shipment.
If you plan to ship a car or any other cargo overseas, understanding Incoterms helps avoid disputes, unexpected costs, and insurance gaps. Below is a detailed guide to the most commonly used Incoterms in international shipping and how they affect shippers.
What Are Incoterms and Why They Matter
Incoterms clarify:
Who pays for transportation
Who is responsible for export and import clearance
When risk transfers from seller to buyer
Who arranges insurance
They do not cover ownership transfer or payment terms, but they are legally recognized worldwide and must be clearly stated in contracts and shipping documents.
Most Common Incoterms Used in Shipment
1. EXW (Ex Works)
Under EXW, the seller makes the goods available at their premises. The buyer assumes nearly all responsibility from pickup onward.
Seller responsibilities:
Package goods
Make cargo available at origin
Buyer responsibilities:
Export clearance
Freight, insurance, and delivery
Import clearance and taxes
Best for: Experienced buyers with logistics partners
**If you ship a car under EXW, you must manage export documentation and in land transport, which can be challenging without a freight forwarder.
2. FOB (Free on Board)
FOB is commonly used for ocean freight. The seller is responsible until the cargo is loaded onto the vessel.
Seller responsibilities:
Export clearance
Delivery to port
Loading onto vessel
Buyer responsibilities:
Ocean freight
Insurance
Import clearance and delivery
Risk transfer: Once the cargo is on board
FOB is frequently used when buyers ship a car by sea and want more control over ocean freight costs.
3. CFR (Cost and Freight)
Under CFR, the seller pays for ocean freight to the destination port, but risk transfers once the cargo is loaded.
Seller responsibilities:
Export clearance
Ocean freight
Buyer responsibilities:
Insurance
Import clearance and taxes
This term is suitable when sellers arrange shipping, but buyers manage insurance—important when you ship a car with high declared value.
4. CIF (Cost, Insurance, and Freight)
CIF is similar to CFR but includes insurance arranged by the seller.
Seller responsibilities:
Export clearance
Ocean freight
Minimum insurance coverage
Buyer responsibilities:
Import clearance
Local delivery
While convenient, CIF insurance coverage is often limited. When you ship a car , buyers should confirm coverage limits match the vehicle’s value.
5. DAP (Delivered at Place)
DAP places most responsibility on the seller, who delivers the cargo to an agreed destination.
Seller responsibilities:
Export clearance
Freight and delivery to destination
Buyer responsibilities:
Import clearance
Duties and taxes
DAP is ideal for first-time shippers who want simplified logistics when they ship a car internationally.
Choosing the Right Incoterm
Selecting the correct Incoterm depends on:
Experience level of buyer and seller
Control over shipping costs
Insurance requirements
Destination country regulations
Always specify the Incoterm version (e.g., Incoterms® 2020) and named place or port in contracts.
Final Thoughts
Incoterms are the foundation of international shipping clarity. Misunderstanding them can lead to unexpected fees, uninsured losses, or legal disputes. Whether you are exporting goods commercially or planning to ship a car , choosing the right Incoterm ensures transparency, compliance, and smooth cargo movement across borders
Trans Global Logistics UK Limited, International Shipping & Logistics Company with 30 years of experience, will be able to offers several services for your Yacht and Boat Transport / Customs Clearance / Import and UK Vehicle Registration to confidently support your shipment in either Import or Export for any type of equipment.
Contact us at Trans Global Logistics UK Limited – bizdev@tglog.co.uk – phone 07833 410 281 www.tglog.co.uk