International shipping 101: Incoterms, ISF, and HTS codes

Domestic shipping has one big question: which carrier? International shipping has a dozen, and most of them aren't about transit time. They're about who pays for what, who's liable if the container falls off the ship, and how much duty the importing country wants to charge. Three things make up 80% of the answer.

1. Incoterms — who pays, where, when

Incotermsare an international standard published by the International Chamber of Commerce. They define exactly where the seller's responsibility ends and the buyer's begins on an international shipment. There are 11 of them. You only need to know 4.

EXW — Ex Works

The seller's job ends when they make the cargo available at their own warehouse. The buyer arranges everything — pickup, export clearance, freight, insurance, import clearance, final delivery.

Buyer beware:EXW is the riskiest term for the buyer. You're on the hook for export customs in a country where you don't have a presence. If anything goes wrong with the export paperwork, it's your problem.

FOB — Free On Board

Seller delivers the cargo onto the ship at the origin port. From that moment on, the buyer owns the cargo and pays for everything. This is the most common term in ocean freight.

CIF — Cost, Insurance, Freight

Seller pays for cargo, insurance, and freight to the destination port. Once it arrives at port, the buyer handles import customs and final delivery. CIF makes the seller's pricing look higher but they bake the freight into the unit cost.

DDP — Delivered Duty Paid

The seller delivers all the way to the buyer's door, including paying duties and taxes at the destination. The buyer does nothing except receive the goods.

Best for the buyer, worst for the seller.DDP is the ecommerce-friendly term — your customer in Germany doesn't get a surprise duty bill from DHL. But you, the seller, need a customs broker in Germany and need to factor duties into your pricing.

2. ISF — Importer Security Filing (U.S. ocean imports only)

The U.S. requires an ISF (Importer Security Filing) also called 10+2 — to be filed 24 hours before the cargo is loaded onto the ship at the foreign port. Yes, before it even leaves the country.

The filing requires 10 data points from the importer and 2 from the carrier. Missing or late ISF filings carry a $5,000 penalty per infraction. Don't skip it.

Who files it: the importer of record, but in practice your customs broker does it on your behalf using info you provide. The 10 data points are:

1. Manufacturer (or supplier) name and address
2. Seller name and address
3. Buyer name and address
4. Ship-to name and address
5. Container stuffing location
6. Consolidator (stuffer) name and address
7. Importer of record number
8. Consignee number
9. Country of origin
10. HTS code (6-digit minimum, see below)

3. HTS / HS codes — how duty is calculated

Every product crossing a border gets classified using the Harmonized System (HS) code — a 6-digit number used worldwide. The U.S. extends this to a 10-digit Harmonized Tariff Schedule (HTS) code that adds country-specific detail.

The HTS code determines:

• The duty rate (anywhere from 0% to 30%+ depending on the product and origin country)
• Whether your goods are eligible for any preferential trade agreements (USMCA, GSP, etc.)
• Whether anti-dumping or countervailing duties apply
• Whether import restrictions or licenses are required

How to find your code: the U.S. ITC publishes the full HTS at hts.usitc.gov. You can search by product description. For non-U.S. destinations, the WCO Trade Tools site (wcotradetools.org) is the global reference.

Get it wrong intentionally?That's customs fraud. Get it wrong honestly? CBP issues a notice and recalculates the duty owed plus interest. Always check codes carefully, especially for products where classification is debatable (electronics, textiles, composite goods).

The documents that travel with every international shipment

• Commercial invoice — what the cargo is, what it's worth, who's buying and selling. Drives the duty calculation.
• Packing list — what's in each box/pallet/container, weight, dimensions.
• Bill of lading (BOL) for ocean / air waybill (AWB) for air — the contract of carriage with the shipping company.
• Certificate of origin — proves where the goods were made. Critical for claiming USMCA, GSP or other trade preference duties.
• Importer of record (IOR) — the legal entity responsible for ensuring the import complies with all regulations.

What actually goes wrong

1. Incoterm mismatch in the PO. Buyer thinks they bought DDP; seller thinks they sold FOB. Cargo lands, no one paid the duty, customer is angry.
2. HTS code is too generic.Carrier's default codes for “widget” trigger reviews and delays. Specific codes clear faster.
3. ISF filed late. $5,000 penalty per shipment. Brokers who file at the last minute eventually slip.
4. Commercial invoice value mismatch.Insurance values, commercial invoice and customs entry must agree. They often don't.

Make it someone else's job

Your customs broker handles ISF, HTS classification, entry filings and most of the paperwork. Licensed brokers in every market we serve — talk to us before your first international shipment and we'll set the process up right.