INCOTERMS 2020 Guide: EXW, FOB, CIF, DDP Explained

In international trade, one of the most consequential decisions you make isn't the price — it's the delivery term. INCOTERMS (International Commercial Terms), published by the ICC and last updated in 2020, define exactly where one party's responsibility ends and the other's begins.

Why INCOTERMS Matter

Choosing the wrong INCOTERMS can mean unexpected customs costs, unresolved liability for damaged goods, uninsured cargo in transit, and legal disputes. Whether you're exporting textiles from Istanbul or importing machinery into Ankara, the chosen term directly shapes your landed cost.

The Four Most Used INCOTERMS

EXW – Ex Works

Minimum obligation for the seller. Goods are made available at the seller's premises; the buyer handles everything from there — loading, inland transport, export customs, sea freight, import customs. Works well for experienced importers with their own freight forwarder in Turkey. For buyers without local logistics support, EXW can be a costly surprise.

FOB – Free On Board

Sea and inland waterway only. Seller covers all costs until goods are loaded on board the vessel at the named port. Risk transfers at that moment. FOB is the most common term for Turkey's container exports out of Ambarlı, İzmir and Mersin — clean, simple, and well understood by both sides.

CIF – Cost, Insurance and Freight

Sea transport only. Seller pays freight and insurance to destination port, but risk transfers to the buyer at loading — a structural tension worth understanding. If goods arrive damaged, the buyer files the insurance claim against a policy arranged by the seller. Always review the insurance policy details in CIF offers.

DDP – Delivered Duty Paid

Maximum obligation for the seller. Goods are delivered to the named destination with import duties paid. Growing in e-commerce exports as buyers demand zero surprise costs at delivery. For Turkish exporters shipping to the EU, DDP also creates VAT registration obligations in the destination country — clarify this with your customs broker upfront.

Choosing the Right Term

A practical starting point: if you have limited export experience and strong logistics knowledge of the buyer's country, FOB or EXW keeps it clean. To offer convenience and present a single all-in price, consider CIF or DAP. For high-volume regular shipments, FOB gives both sides full cost transparency.

Our customs clearance team handles the documentation requirements that flow from your chosen INCOTERMS, and our sea freight and road freight teams can give you a concrete cost comparison before you commit to a term.