Importing Goods Internationally: What Every New Business Owner Needs to Know

Understanding Who’s Responsible for What

When you're importing products from overseas—whether it's textiles, packaging, or raw materials—one of the first things you'll encounter is a set of cryptic acronyms: DDP, EXW, FOB, CIF. These aren’t just shipping terms—they’re legal frameworks that define who pays for what, who handles customs, and who’s on the hook if something goes wrong.

Let’s break it down.

What Are Incoterms?

Incoterms (short for International Commercial Terms) are globally recognized rules published by the International Chamber of Commerce. They define the responsibilities of buyers and sellers in international trade—especially around shipping, customs, and risk.

Think of them as the fine print that decides:

• Who arranges transportation
• Who pays duties and taxes
• Who handles customs paperwork
• Who’s liable if goods are damaged or delayed

Common Shipping Terms You’ll Encounter

Why This Matters for Your Business

Choosing the right shipping term affects:

• Your landed cost (the true cost of getting goods to your door)
• Your cash flow (who pays upfront for duties and freight)
• Your risk exposure (who’s liable if something goes wrong)

For example:

• DDP is convenient but expensive. The seller handles everything, but you pay a premium—and they may not understand your country’s import rules.
• EXW is cheap but risky. You’re responsible for everything, including export clearance in a foreign country. That’s a logistical headache unless you have a freight forwarder.

Tips for First-Time Importers

1. Ask for clarity: Don’t just accept a quote with “DDP” or “FOB”—ask what’s included. Does it cover customs clearance? Duties? Final delivery?
2. Work with a freight forwarder: They can help you navigate paperwork, taxes, and logistics.
3. Know your country’s import rules: Some countries require the importer to be a registered entity. If your supplier offers DDP but isn’t registered locally, it could cause delays or fines.
4. Factor in hidden costs: Duties, VAT, port fees, and inland transport can add up. Always calculate your landed cost, not just the product price.

Real-World Example: Importing Quilts

Let’s say you’re importing linen quilts from Portugal to the U.S.

• EXW: You arrange pickup from the factory, ocean freight, customs clearance, and delivery to your warehouse.
• FOB: The supplier gets the quilts onto the ship. You handle everything from the port onward.
• DDP: The supplier delivers the quilts to your warehouse, handling all logistics and duties. You pay one bundled price.

Each option shifts responsibility—and risk—in different ways. Choose based on your infrastructure, budget, and appetite for complexity.

In a future post we will discuss how to manage tariffs?