Guide to Incoterms
Incoterms define who pays for what in international shipping. Learn which terms work best for US-Mexico trade and how to choose the right one for your business.
Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce. They define the responsibilities of buyers and sellers in international transactions.
Each Incoterm specifies:
- Who pays for transportation at each stage
- Who is responsible for insurance
- Where risk transfers from seller to buyer
- Who handles export and import clearance
Important
Incoterms define cost and risk responsibility, but they don't transfer ownership or determine payment terms. Those are separate contractual matters.
Common Incoterms Explained
Ex Works
Seller responsibility: Minimal | Buyer responsibility: Maximum
Seller makes goods available at their premises. Buyer handles everything from pickup.
Risk transfers at seller's premises
Less common for international trade—puts all burden on buyer
Recommended for Mexico
FCA Laredo
Seller delivers to Laredo. Buyer handles Mexico import and inland transport. Clean handoff at the border.
DAP [Mexico City]
Seller handles everything to buyer's door in Mexico. Buyer just handles import clearance.
DDP [Mexico City]
Seller handles everything including Mexican import duties.
Common Questions
FCA Laredo is very common—it creates a clean handoff at the border. The seller delivers to Laredo, and the buyer's Mexican broker handles import. DAP is also popular when sellers have Mexico logistics capabilities.
Under DDP, seller pays all duties. Under all other terms, buyer pays import duties. Export duties (rare) are typically seller's responsibility.
FOB is only for sea freight—risk transfers when goods cross the ship's rail. FCA works for any transport mode and is more appropriate for trucking, which dominates US-Mexico trade.
Not directly. Customs filing is separate from Incoterms. However, under DDP the seller typically coordinates import clearance since they're responsible for duties.
Yes, and many companies do. You might use DDP for small customers wanting convenience, and FCA for large customers who prefer to control their own logistics.
Need help with shipping terms?
We can help you choose the right Incoterms and handle logistics for any arrangement.