Speaking the Shipping Language: A Beginner’s Guide to Freight Terms

When you're sourcing materials internationally, the shipping world can feel like it has its own language. Acronyms like FOB, DDP, and EXW get tossed around like everyone knows what they mean—but if you’re scratching your head, you’re not alone.

At Supply Junkie, we believe in clarity over confusion. So here’s a quick breakdown of the most common Incoterms (International Commercial Terms) that you'll encounter when importing goods—plus how they impact your project, timeline, and budget.

What Are Incoterms?

Incoterms are internationally recognized rules that define who’s responsible for what during the shipping process. They outline which party covers costs like freight, insurance, duties, and more—and at what point responsibility transfers from the seller to the buyer.

Understanding Incoterms helps you:

• Compare quotes more accurately

• Avoid surprise costs

• Decide how much control (and risk) you want to take on

  
  

FOB – Free On Board

This term is all about the transfer of risk.

• FOB Origin (FOB Shipping Point): You take ownership as soon as the goods are loaded onto the shipping vessel. From that point on, it's your responsibility.

• FOB Destination: The seller handles everything until the goods arrive at your designated location. Fewer headaches—but often more expensive.

DDP – Delivered Duty Paid

DDP means the seller is responsible for everything—including shipping, customs, taxes, and duties—all the way to your door.

While it sounds ideal, beware:

• You’re still responsible for unloading the shipment (which is tricky for large or heavy items).

• Less control and visibility throughout the process, and often inflated costs.

EXW – Ex Works

With EXW, the seller does the least—they make the goods available at their factory or warehouse, and you do the rest.

This includes:

• Pickup from the factory

• International freight

• Customs clearance

• Final delivery

EXW gives you the most control, but also requires solid logistics partners (hello again, that's us 👋).

CIF – Cost, Insurance, and Freight

The seller covers:

• Cost of the goods

• Insurance for the shipment

• Freight to the destination port

Once it arrives at your port, you handle customs, duties, and delivery to the final destination. It’s a good middle-ground option if you want some support but still want control once it lands.

FAS – Free Alongside Ship

This one’s for ocean freight. The seller is responsible for getting the goods alongside the ship at the named port.

From there:

• You arrange loading onto the vessel

• You take on all risk and costs beyond that point

FAS is typically used for larger commercial buyers and bulk shipments.

Why It All Matters

Knowing your Incoterms means fewer surprises, better planning, and smarter sourcing. When you understand who handles what—and when—you can budget better and avoid costly missteps.

Still not sure which option is right for your order? No problem. Supply Junkie can walk you through it and help you choose the shipping strategy that fits your project like a glove.