Why Incoterms matter
Two quotations with the same unit price can lead to very different total costs depending on the Incoterm. The term tells you exactly where the seller’s responsibility ends and yours begins.
The terms you will see most often
| Term | Seller’s responsibility | Buyer’s responsibility |
|---|---|---|
| EXW — Ex Works | Makes the goods available at its premises | Everything from pick-up, including export clearance in China |
| FOB — Free on Board | Export-clears the goods and loads them on the vessel at the named port in China | Main sea freight, insurance, import clearance, and delivery |
| CFR — Cost and Freight | FOB plus main sea freight to the destination port | Insurance, import clearance, and delivery — risk passes at loading in China |
| CIF — Cost, Insurance and Freight | CFR plus minimum cargo insurance | Import clearance and delivery — risk passes at loading in China |
| DAP — Delivered at Place | Delivers to a named place in Egypt, ready for unloading | Import clearance, duties, and taxes |
| DDP — Delivered Duty Paid | Delivers to a named place, including import clearance, duties, and taxes | Unloading |
Which term should an importer choose?
Many importers prefer FOB: the supplier handles export clearance in China, while the buyer chooses who carries the main voyage and keeps control of cost, timing, and information.
- EXW can be difficult, because the buyer becomes responsible for export clearance in China.
- With CFR and CIF, the risk passes to you in China even though the seller arranges the freight.
- DDP into Egypt is often impractical for foreign sellers, because import clearance requires a registered local importer.
Write the term correctly
Always state the term, the named place or port, and the version — for example “FOB Ningbo, Incoterms 2020”. Incoterms do not cover payment terms or the transfer of ownership; those belong in your contract.
Unsure which Incoterm suits your shipment? We can review your supplier’s quotation and explain what it includes.
General guidance. Requirements vary by product, route, and date, so they are confirmed for each request.