Logistics, Freight & Shipping Terms

Buying something is only half the story. The goods still have to physically travel — sometimes across an ocean, through a port, past customs officers, and onto a truck — before they reach you. That whole journey is logistics, and it has its own vocabulary: freight, carriers, customs, and a famous set of three-letter codes called Incoterms. Learn the basics and shipping delays stop being a mystery and start being something you can ask sharp questions about.

The journey: from factory floor to your door

Logistics is the umbrella word for moving and storing goods. Freight is the cargo itself — and also the word used for the cost of shipping it (“the freight on this order was high”). A carrier is the company that does the actual moving: a shipping line, an airline, a trucking firm, a courier. When goods cross a border, they pass through customs, where a government checks the paperwork and charges any duties (import taxes). Each handoff — factory to carrier, carrier to port, port through customs, customs to final truck — is a place where time and money can leak.

Incoterms: who pays and who is to blame, in plain English

Incoterms are standard three-letter codes that answer two questions for every shipment: at what point does the cost shift from seller to buyer, and at what point does the risk (if it is lost or damaged) shift too. They exist so a buyer in one country and a seller in another mean exactly the same thing. You do not need all of them, but a few come up constantly.

EXW (Ex Works) is the most buyer-unfriendly: the seller just leaves the goods at their own factory door, and everything after that — transport, customs, insurance — is your problem. FOB (Free On Board) means the seller gets the goods onto the ship; from that moment the cost and risk are yours. CIF (Cost, Insurance, Freight) means the seller pays to get the goods to your port, insurance included, but risk still passes earlier than you might expect. DDP (Delivered Duty Paid) is the most buyer-friendly: the seller handles everything, including customs duties, right to your door.

Rule of thumb: the further down the alphabet of effort the seller goes, the less you do — and usually the more you pay in the price. EXW looks cheap and DDP looks expensive, but the real cost is the same journey, just split differently.

Spot it: Incoterms in context

Read each situation and decide for yourself, then tap a card to flip it and check your answer.

Sort the freight responsibilities

Drag each task or cost into the Incoterm where it belongs — or tap an item, then tap a term. Hit Check placement when you’re done.

Why the term changes the real price

Two quotes can look wildly different purely because of their Incoterm. An EXW price looks low because it excludes all the shipping, customs, and insurance you will have to arrange and pay yourself. A DDP price looks high because it bundles all of that in. Comparing an EXW quote to a DDP quote without adjusting is comparing a bare ticket to an all-inclusive one. The smart buyer always asks what the landed cost is — the true total once the goods are actually sitting in your warehouse.

How to use it

When a quote arrives, find the Incoterm and translate it: “This is EXW, so the price excludes shipping and customs — what is the landed cost?” When a shipment is late, locate it in the chain: “Is it still with the carrier, or stuck in customs?” When comparing suppliers, normalise the terms: “One quote is FOB and one is DDP — let us compare them on landed cost, not sticker price.” Useful phrases: “What is the Incoterm on this?” “Does that price include duties, or just the goods?” “Where in the freight journey is it sitting right now?” Asking these turns a vague “it is on its way” into a real status — and stops you being surprised by a customs bill you did not budget for.