Let's start with what nobody tells you
The Incoterms in force are the 2020 ones. There is no such thing as "Incoterms 2026". The International Chamber of Commerce (ICC), which publishes them, updates the rules in ten-year cycles: the current edition is Incoterms® 2020 and the next one is expected around 2030.
Search the term and you will find dozens of articles titled "Incoterms 2026". There are no new rules — it is content renamed every year to capture searches. We mention it because if you make a commercial decision believing a new version exists, you will go looking for changes that are not there.
With that out of the way, here is the useful part.
What an Incoterm is, in one sentence
An Incoterm is a three-letter code that defines where the seller stops and the buyer starts: who books transport, who pays each leg, who carries the risk if goods are damaged, and who handles customs. It does not define price, payment terms, or legal ownership of the goods.
That last point is the expensive one: an Incoterm allocates cost and risk, not title.
The 11 terms in force
Seven work for any mode of transport; four are exclusive to sea and inland waterway freight.
| Code | Name | In short |
|---|---|---|
| EXW | Ex Works | The seller only makes the goods available at their premises. Everything else is on the buyer |
| FCA | Free Carrier | The seller delivers to the carrier the buyer designates |
| CPT | Carriage Paid To | The seller pays freight to destination; risk passes to the buyer earlier |
| CIP | Carriage and Insurance Paid To | Same as CPT, plus the seller buys insurance |
| DAP | Delivered at Place | The seller delivers at destination, not unloaded, import duties unpaid |
| DPU | Delivered at Place Unloaded | Like DAP, but the seller also unloads |
| DDP | Delivered Duty Paid | The seller delivers everything paid, import taxes included |
| FAS | Free Alongside Ship | Sea freight. The seller places cargo alongside the vessel |
| FOB | Free on Board | Sea freight. Risk passes once goods are on board |
| CFR | Cost and Freight | Sea freight. The seller pays freight, not insurance |
| CIF | Cost, Insurance and Freight | Sea freight. The seller pays freight and insurance |
Classification per the ICC, as summarized by DHL Global Forwarding.
The three you will actually use
If you import product to sell online, the conversation almost always narrows to three.
EXW is the cheapest on the quote and the most expensive in practice. The supplier gives you a low price because they do nothing beyond leaving the goods at their door: you book transport in their country, you handle export clearance, you pay everything. For a first-time importer, it is the fast lane to cost overruns.
FOB is the de facto standard for ocean imports from Asia. The supplier takes the cargo to the port and loads it; from there it is yours. It is predictable and comparable across suppliers, which is why it became the reference point.
DDP is the one that sounds perfect and deserves a second read. The supplier delivers everything paid, duties included. The question almost nobody asks: who appears as the importer of record before Mexican customs? If the answer is "the supplier handles it", it is worth understanding exactly how — whoever imports takes on tax and compliance obligations in Mexico, including the labeling Mexican regulation requires.
The mistake that costs money
The most common one is not picking the wrong Incoterm. It is believing the Incoterm solves customs.
A well-negotiated DDP removes paperwork, but it does not remove your responsibility over what enters the country under your brand. A cheap FOB is worthless if your product reaches Mexico without meeting labeling regulation and gets held. The Incoterm defines who pays for the trip; compliance at destination remains a property of your product.
So in practice the decision is not only "which Incoterm do I sign" but "which part of the chain do I want to control, and which part do I want to hand to someone who already runs it".
Frequently asked questions
Which version of the Incoterms is current? Incoterms® 2020, published by the ICC. That is the version in force in 2026; the next edition is expected around 2030.
Does the Incoterm decide who owns the goods? No. It allocates costs, risks and formalities. Ownership is governed by the sales contract.
Can I switch Incoterms with the same supplier? Yes, it is part of commercial negotiation. Many brands start at EXW or FOB and move to arrangements that delegate more legs as volume grows.
Which Incoterm suits a first import? There is no universally "correct" one, but FOB tends to be the most manageable starting point: it is comparable across suppliers and leaves the international leg with a partner you choose.
Choosing the Incoterm is half the conversation; the other half happens when the container lands in Mexico. If you would rather hand that part — clearance, compliance and putting stock away — to someone who runs it daily, take a look at our import and customs service or how we handle NOM labeling before the product goes on sale.