If you manage global logistics, you’ve likely asked: What Incoterms should we be using – and when should we change them? These three-letter trade terms do far more than define who pays for shipping. They shape your control over freight, your exposure to risk, and your total landed cost. Choose wrong, and you could face shipment delays, surprise charges, or damage to customer trust.
One mistake companies make regarding Incoterms is not reevaluating these purchase terms as their businesses grow and mature. What works for a startup might be the wrong choice for a growing enterprise.
Let’s explore how Incoterms affect your freight flow, how they should evolve as your company grows, and how Dimerco helps global shippers use them more effectively, especially across Asia-Pacific trade lanes.
Why Incoterms Matter in Global Shipping
Incoterms, short for International Commercial Terms, are global rules created by the International Chamber of Commerce. They define the buyer and seller’s responsibilities for costs, risk, and logistics throughout the shipping journey.
Without clear Incoterms, businesses run into misunderstandings:
- Who books the freight?
- Who insures the cargo?
- Who handles delays at customs?
For a good, basic primer on Incoterms, read our Incoterms 101 Guide.
There are 11 different Incoterms. What’s important to understand is that each represents a point on a continuum. Some terms require the buyer of goods to primarily manage and pay for international shipping; some require more from the seller; and some involve equal sharing of responsibilities during the journey from factory to final customer.
Newer or smaller businesses with limited logistics knowledge and resources often default to terms that shift responsibility to their trading partner. Exporters may choose terms like EXW or FCA that shift responsibility to the buyer. Importers may choose terms like DDP that call for the seller to manage shipping. These decisions, while they could be wise at the start, may damage your business as it matures.
Ideally, shippers should align their Incoterms strategy to their enterprise growth stage. Understanding when to move from reactive to proactive logistics control can help companies reduce risk and capture more value.
Why Trade Terms Should Change as Your Business Grows
As your enterprise grows and matures, a couple of things happen. One, your bargaining power increases. More revenue means increased freight volumes that you can leverage to extract lower freight rates from carriers. Secondly, your logistics experience increases. You may even add dedicated logistics staff to manage carrier selection, paperwork and customs processing.
At this point, it makes sense to shift Incoterms to match your added size and sophistication to so that you can gain greater control over your supply chain.
For example, Dimerco has worked with many companies exporting out of China who have benefited greatly by shifting from FOB or FCA terms to CIF or DAP terms, putting more shipping responsibility under their direct control. This decision has resulted in:
- Greater Control of the Supply Chain from Door to Door
Eliminate reliance on third-party buyer arrangements and manage your shipments proactively. - Improved Service Quality and Lead Time
Gain visibility and responsiveness by working directly with your logistics partner. - 10–30% Cost Savings
By choosing your own trusted freight forwarder, you can consolidate volume, negotiate better rates, and reduce inefficiencies.
Real-World Example: The Incoterms Evolution of a Fortune 500 Consumer Electronics Company
A great example is a China-based, Fortune 500 maker of smartphones and other consumer electronics. . From 2010 to 2017, during its early growth stage, the company primarily used FCA and FOB terms for trucking and customs brokerage. These terms allowed buyers to handle shipping.
As it scaled, the company transitioned to CIF and DAP terms from 2018 onward to better manage cost, lead time, and carrier selection across its global supply chain. The shift gave them full visibility and enabled smarter vendor consolidation – key steps for a growing brand with increasing international volume.
By matching their trade terms to their maturity stage, this global powerhouse in the tech world strengthened control and profit margins.
What Incoterms Should I Use? Key Factors to Consider
Here’s what your team should weigh before choosing:
- Cost Control: Do you want to handle freight booking or have the seller include it in the price?
- Insurance Responsibility: Who insures the cargo? Some Incoterms include it, others don’t.
- Customs Clearance: Are you equipped to manage all that is involved in processing your cargo through customs and ensuring trade compliance?
- Risk Management: When does risk transfer, and are you comfortable with that timing?
Avoid These Common Incoterm Mistakes
As you mature and change Incoterms, make sure to avoid these common mistakes:
- Thinking Incoterms determine payment terms – they don’t determine when or how payment occurs.
- Assuming Incoterms define ownership – they only define cost and risk, not legal title. Use your sales contract to define when ownership changes.
- Forgetting insurance – some Incoterms (like FOB) don’t include it. Check your coverage.
- Failing to specify a precise delivery location – saying “DAP New York” is too vague. Use a specific address to avoid confusion or denied insurance claims.
Not determining who pays terminal handling charges – this is particularly important when the seller is responsible for cargo beyond the port of shipment. Outline who handles these charges in your contract to avoid unexpected costs.
Logistics Partners Can Play a Key Role in Incoterms Selection
As your company transitions to more advanced Incoterms and takes control of shipping, keep in mind that you can lean on strong global logistics partners to manage your added responsibilities. That’s why your choice of logistics provider becomes critical. Look for:
- An experienced partner well-versed in the PROs and CONs of various Incoterm options.
- AEO or CTPAT certifications for smooth and secure customs clearance.
- A global freight forwarding network to support port-to-door or door-to-door execution across regions. Freight forwarders that rely largely on agents will offer less quality control and visibility.
- An integrated suite of global shipping services – air, ocean, customs brokerage, logistics, insurance – to manage all aspects of door-to-door shipping through a single partner..
Companies without in-house logistics knowledge don’t need to delay. A capable partner like Dimerco can guide the transition, recommend the appropriate shipping Incoterms, and help train internal teams.
Dimerco’s Role in Smarter Global Shipping
Dimerco helps companies manage high-speed, high-stakes supply chains, especially in and out of Asia-Pacific. If you’re struggling with Incoterm selection, here’s how we support you:
- Clear advice on which terms align with your business goals and growth maturity
- Deep experience in complex Asia-Pac shipments
- Fast and reliable intra-Asia freight routing
- Real-time visibility and flexible freight planning
- Professional Incoterms guidance to help you proactively control shipping costs and service quality
Whether you’re managing your first international shipment or rethinking strategy on a key trade lane, Dimerco brings the knowledge and freight access to keep goods moving and customers happy.
Move Forward With Confidence
Choosing the right Incoterms for shipping is about more than cost – it’s about control, visibility, and reducing risk. Your Incoterms strategy should evolve with your business maturity.
Ready to take the next step? Talk to Dimerco to assess whether your trade terms match your current capabilities so you can move freight smarter, reduce costs, and scale with confidence.
