Incoterms (International Commercial Terms) are ICC-published standard trade terms that define delivery, risk transfer and cost allocation between buyers and sellers in international trade. The current version is Incoterms 2020.

What is the most commonly used Incoterm?

FOB and CIF are most widely used for sea freight, especially in Asia-Europe and Asia-US trade. FOB is preferred by buyers who want to control freight and carrier selection. DDP is increasingly used for B2C and direct-to-consumer e-commerce.

What is the difference between FOB and CIF?

Under FOB, the buyer arranges and pays ocean freight and insurance. Under CIF, the seller arranges and pays minimum freight and insurance to destination port. Risk transfers at the loading port in both cases.

DDP (Delivered Duty Paid) means the seller pays everything — freight, insurance, import clearance, duty, taxes and delivery to the named destination. Maximum seller obligation and most buyer-friendly term.

Does this calculator give legally binding results?

No. This is a simplified planning guide. Legal Incoterms obligations are defined by the sales contract, the Incoterms 2020 rules, and applicable law. Consult a freight forwarder or trade lawyer for contract drafting.

Can I use Incoterms for domestic shipments?

Incoterms were designed for international trade but may be used domestically. For cross-border transactions, they provide a globally recognised cost and risk allocation framework.

Incoterms Cost Split Calculator

Select an Incoterm (EXW, FCA, FOB, CFR, CIF, DAP, or DDP) and enter estimated costs to see how total shipment costs split between buyer and seller. Simplified planning guide only — not a legal Incoterms interpretation.

Select an Incoterm and enter estimated costs to see how total shipment costs split between buyer and seller. Planning guide only — not a substitute for legal Incoterms interpretation or contract advice.

Select Incoterm

Free on Board — seller covers origin costs and loads goods on the vessel. Buyer covers freight, insurance, destination.

Goods Value

Origin Charges (packing, trucking, handling)

Export Clearance

International Freight

Cargo Insurance

Destination Charges (port, unloading)

Import Clearance (broker fee)

Import Duty & Taxes

Delivery to Warehouse

Formula

Seller Cost = Goods + all costs up to agreed delivery point | Buyer Cost = all costs from agreed point onwards

Incoterms define the point at which cost and risk pass from seller to buyer. EXW represents minimum seller obligation (goods only). DDP represents maximum seller obligation (everything including duty and delivery). Terms in between split costs at specific points in the transport chain — origin, vessel loading, destination port, or final delivery location.

Worked Example — FOB vs CIF Comparison

Same shipment, two Incoterms — USD 10,000 goods · USD 1,200 freight · USD 80 insurance:

FOB: Seller pays goods + origin + export = ~USD 10,450 · Buyer pays freight + insurance + destination + duty

CIF: Seller pays goods + origin + export + freight + insurance = ~USD 11,730 · Buyer pays destination + duty

Under FOB, the seller quotes USD 10,000 and the buyer arranges freight. Under CIF, the seller quotes USD 11,730 (including freight and insurance) and controls those costs — but the risk transfers to the buyer at the loading port regardless. Many buyers prefer FOB to control freight costs and carrier selection.

FAQ

Frequently Asked Questions

Incoterms (International Commercial Terms) are standardised trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions. They specify who pays for each stage of the shipment, who bears the risk at each point, and who arranges transport, insurance and customs clearance. The current version is Incoterms 2020.

Under FOB, the seller pays origin costs and loads goods on the vessel — the buyer arranges and pays for ocean freight and insurance. Under CIF, the seller additionally arranges and pays for the ocean freight and minimum insurance to the destination port — but risk still passes to the buyer when goods are loaded at the origin port. The key distinction is who controls and pays for the main carriage leg.

Use this in your workflow

Use the buyer cost total to feed into the Landed Cost per Unit Calculator. Calculate freight cost with the Freight Cost per KG Calculator and duty with the Import Duty Calculator. Browse all Online Business Calculators.

When to use this calculator

→Comparing buyer total cost under FOB vs CIF vs DDP for the same shipment
→Briefing a new supplier on how Incoterms affect the quoted price responsibility
→Understanding total seller cost under DDP to ensure the quoted price is profitable
→Training procurement or finance teams on Incoterms cost allocation

Related calculators

Landed Cost per Unit CalculatorCalculate per-unit landed cost from all import charges Import Duty CalculatorEstimate import duty from customs value and duty rate Freight Insurance CalculatorEstimate cargo insurance premium for the shipment Freight Cost per KG CalculatorCalculate effective freight rate per kg from total invoice