Incoterms Explained: What International Buyers Need to Know Before Signing a Contract

For any business new to international trade, Incoterms are one of the most misunderstood — and most consequential — parts of a contract. These standardised terms, published by the International Chamber of Commerce, define exactly where the seller’s responsibility ends and the buyer’s begins: who arranges shipping, who carries the risk in transit, who pays import duties, and at what point ownership actually transfers.

Getting this wrong is rarely obvious until something goes wrong — a shipment is delayed at customs, damaged in transit, or arrives with unexpected charges neither party budgeted for. A buyer who assumes “the supplier is handling everything” under an EXW agreement may be surprised to learn they’re responsible for freight, insurance, and export clearance from the seller’s factory gate.

At Raholu Holdings, we treat Incoterms as a starting conversation, not fine print. Before any agreement is signed, we walk buyers and suppliers through exactly what each term means in practice — not just the legal definition, but the real operational and cost implications for their specific shipment. The right Incoterm depends on the buyer’s logistics capability, risk appetite, and familiarity with the destination market’s customs process.

A well-chosen Incoterm protects both sides of a deal. It’s a small detail with large consequences — and it’s exactly the kind of detail a good procurement partner should be handling before you ever see a problem.