Trade glossary — plain-language definitions

Incoterms® (International Commercial Terms) are 11 standardized 3-letter codes published by the ICC that define exactly where the seller's responsibility ends and the buyer's begins on cost, risk, insurance, and customs clearance.

FOB (Free On Board) is an Incoterm where the seller's responsibility ends the moment cargo is loaded onto the ship at the named port of export. The buyer then pays for ocean freight, marine insurance, destination port handling, customs duty, and last-mile delivery.

CIF is an Incoterm where the seller pays for ocean freight and the minimum marine insurance (110% of CIF value) to the destination port. The buyer handles customs clearance, duty, and last-mile delivery from there.

DDP is an Incoterm where the seller takes full responsibility for freight, insurance, export and import customs, duty, taxes, and last-mile delivery to the buyer's named address. The buyer just signs for the box.

HS Code (Harmonized System Code) is a 6-digit product classification developed by the World Customs Organization, used by 200+ countries to identify what's being imported. Most countries extend it to 8 or 10 digits to set duty rates.

Landed cost is the total per-unit cost of an imported product delivered to your warehouse — including FOB price, freight, insurance, duty, customs fees, port handling, and drayage. It's the only number that matters when calculating margin.

CBM (cubic meter) = length × width × height of a box, in meters. Volumetric weight = CBM × a divisor set by the carrier (commonly 167 for air, 1000 for ocean) — gives a 'weight' for billing purposes when cargo is light but takes up space.