Incoterms are eleven standardized trade terms, published by the International Chamber of Commerce, that settle who pays for freight, who carries the risk while a shipment is in transit, and who pays the destination country's import duty on a business sale. A buyer and seller pick one term — EXW, FCA, DAP and DDP are the four that come up most on a parcel-sized export — and write it in alongside a named place, because “DAP Toronto” commits somebody to something and “DAP” alone does not. Seven of the eleven apply to any mode of transport; the other four, including FOB, only apply to sea and inland waterway freight. Definitions below are UPS's own, read 2026-08-21.
The freight charge and the destination duty are always two separate bills. An Incoterm just decides which side of the sale is holding the second one.
SMKlog prices US-domestic labels, so the cleanest way to show an Incoterm is to show what happens when there isn't one available to pick yet. Below is the same 14 × 10 × 8 in, 10 lb box — a boxed set of ceramic mugs — run through our own quote endpoint twice on 2026-08-21: once staying inside the 48 states, once trying to leave them.
| Carrier and service | Price | Delivery |
|---|---|---|
| USPS Ground Advantage | $15.21 | 5-6 business days |
| UPS Ground Saver | $16.77 | 5 business days |
| UPS Ground | $16.86 | 4-5 business days |
| FedEx Smart Post | $17.36 | 4-5 business days |
| UPS 3 Day Select | $25.59 | 3-4 business days |
Change nothing about the box and send it to Toronto, ON (M5V 2T6) instead of Atlanta, and the same endpoint, on the same run, answers with invalid_us_zip and zero rates. That refusal is SMKlog telling a US seller, as plainly as a system can, that this particular screen only prices the domestic leg of anything. It is also exactly the point where an Incoterm stops being trivia: whichever carrier's own international product actually prices that Toronto delivery is the same product where the seller has to state, before the label prints, who is paying Canada's import duty. Neither number on this page is that answer — an Incoterm decides a bill this calculator never shows.
UPS's own glossary, read 2026-08-21, defines Ex Works as the rule under which “a buyer assumes all costs and responsibilities involved with transporting goods from the named place of delivery…including loading the goods on the buyer's collecting vehicle.” The same page is blunt about where that breaks down internationally: it states EXW is best used for domestic sales, and warns that a seller can end up incorrectly recorded as the exporter of record even though the buyer was supposed to hold that job.
Free Carrier moves one job back across the line. UPS's glossary for FCA, also read 2026-08-21, states plainly that “the seller is responsible for any export clearance formalities and costs,” with risk passing to the buyer once the goods are handed to a named carrier, cleared. UPS's own page frames FCA as the fix for exactly the EXW problem above — export paperwork stays with the party who actually knows the product.
DAP and DDP move a different job: the destination duty, not the export clearance. Both are covered in full, with UPS's and DHL's own definitions, on our how to ship DDP guide, so this page states only the shape of it: under DAP (also called DDU) the seller delivers to the named place and the buyer pays the import duty at the door; under DDP the seller pays that duty first and the buyer owes nothing extra on delivery.
| Term | Export clearance | Main transport | Import duty |
|---|---|---|---|
| EXW – Ex Works | Buyer | Buyer arranges, from the seller's door | Buyer |
| FCA – Free Carrier | Seller | Buyer arranges, from the named handoff | Buyer |
| DAP – Delivered at Place | Seller | Seller arranges, to the named place | Buyer |
| DDP – Delivered Duty Paid | Seller | Seller arranges, to the named place | Seller |
Read down the last column and the whole rulebook simplifies to one question: does the buyer or the seller open their wallet when the box reaches customs. Read down the first column and it simplifies to a second one: who is on the hook if the export paperwork is wrong before the box ever leaves the country. EXW and DDP sit at opposite ends of both questions; FCA and DAP split the difference.
A parcel-scale US seller meets Incoterms through a carrier's own international commercial product, not through a retail counter. UPS and FedEx international shipments carry a choice of who is billed the destination duty, which is the DAP-or-DDP decision in practice; a self-service label screen that prices a box in seconds generally is not built to also stand in as an importer of record, which is why our own checkout — shown above — runs DAP by default rather than offering DDP as a checkbox.
Four of the eleven rules never enter this picture at all: FAS, FOB, CFR and CIF apply only to sea and inland waterway transport, per UPS's own glossary, so a parcel moving by air or truck cannot use them. FOB carries an extra trap worth knowing before it trips anyone: the same three letters mean something different on a US bill of lading than in the Incoterms rulebook, and that split has its own page on this site rather than a repeat here. The remaining any-mode rules beyond the four above — CPT, CIP and DPU — turn up mostly in forwarder-arranged freight rather than on a single carton, which is a different scale of shipment.
These are carrier glossary pages, not the Incoterms® 2020 rule text itself, which is a paid International Chamber of Commerce publication. A specific sale contract can define its own terms that override any default read here.
Incoterms are eleven trade terms published by the International Chamber of Commerce that settle who pays for freight, who carries the risk while goods are in transit, and who pays the destination country's import duty on a business sale. UPS's own glossary describes them as rules that define key responsibilities for buyers and sellers, including passage of risk from seller to buyer, export and import clearances, and the allocation of costs.
Under Ex Works the buyer takes on everything from the seller's loading dock onward, including loading the truck and clearing the goods for export — UPS's own glossary calls EXW best used for domestic sales, because a buyer handling another country's export paperwork is a common failure point. Under Free Carrier the seller keeps export clearance and hands the goods to a named carrier already cleared, which is why UPS's page points international sellers toward FCA instead.
SMKlog prices US-domestic labels, and our own quote endpoint refuses a non-US postal code outright rather than pricing an international leg. When a shipment does cross a border through a carrier's own international product, our checkout runs DAP, also written DDU: the destination duty is billed to the recipient on delivery, not to us.
FCA is the one UPS's own materials point export sellers toward, because it keeps export clearance with the seller — the party who actually knows the product and its paperwork — while handing transport and import risk to the buyer at a named place. DDP suits a seller who wants a fixed landed price at checkout with nothing collected from the buyer later, at the cost of running an import entry in a country the seller doesn't operate in. Neither is free; the choice is which side of the border the paperwork is easier to do.
Rarely in practice. UPS's own definition frames Incoterms as rules for business-to-business sale contracts, and USPS's international retail products are built around individual mailers rather than commercial account terms. A small seller quoting Incoterms is almost always looking at a UPS or FedEx international commercial product, or a customs broker, not a retail postage counter.