The freight term you copied is costing you more than the discount you fought for

You negotiated 8% off the unit price and called it a win. Then you quietly handed back three times that — to a shipping term nobody questioned.

An Incoterm is the small code on your contract — FOB, EXW, CIF, DDP — that decides who pays, and who carries the risk, at every leg between the factory and your door. Most importers copy last year's term out of habit. It is one of the most expensive habits in trade.

Where the money leaks

"Free freight at origin" sounds like a gift. It often isn't. Shift the wrong responsibilities and you inherit demurrage — the charges that accrue when a container sits too long at port — plus storage, customs handling and insurance you never priced in. A term that looked cheaper on paper can cost multiples once the container lands.

We've audited contracts where the freight term alone moved landed cost by more than the discount the buyer spent weeks negotiating with the supplier.

Why it stays invisible

Because the number everyone watches — the unit price — didn't change. The leak is downstream, spread across freight, port and handling lines that arrive weeks later, from different vendors, in different currencies. By the time it surfaces, it's filed under "logistics," not "the deal."

The takeaway

Before you celebrate a supplier discount, ask a different question: under this Incoterm, what do I actually own — and what does it cost me? Sometimes the cheapest unit price hides the most expensive chain.

This is the Cost pillar of how we work — the 3C framework: Country, Cost, Capital. We read the whole chain, factory to shelf, so the term you sign matches the margin you keep.

Snell Consult LLC is an international trade intelligence advisory operating across Brazil, the US and China, with teams in Miami, Belo Horizonte and Hong Kong. For a read on where margin is hiding in your operation, a 30-minute discovery call is the place to start — Gabriel@snelllc.com.