Quick Answer
Incoterms 2020 are standard trade terms that define who is responsible for costs and risk at each point of a shipment. The most relevant for importers are EXW (buyer handles everything), FOB (seller loads at origin port, buyer arranges freight), CIF (seller pays freight and insurance to destination port), and DDP (seller delivers duty-paid).
The Four Terms Importers Use Most
| Term | Seller responsible until | Best for |
|---|---|---|
| EXW | Factory door | Buyers with full logistics capability |
| FOB | Goods loaded at origin port | Most China imports (standard) |
| CIF | Destination port (freight + insurance) | Convenience, but often pricier freight |
| DDP | Buyer's door, duty paid | All-in price, simplest for buyer |
FOB is the standard for most China imports because it gives the buyer control of freight while the seller handles origin export. See FOB vs CIF.
Key Takeaways
- Incoterms define who pays and who bears risk.
- FOB is standard for most China imports.
- CIF is convenient but often has pricier freight.
- DDP gives an all-in, duty-paid price.
Frequently Asked Questions
What are Incoterms?
Incoterms are internationally standardised trade terms that define which party — buyer or seller — is responsible for costs, risk, and logistics at each stage of a shipment, from the factory to the destination.
What does FOB mean?
FOB (Free On Board) means the seller delivers the goods, cleared for export, loaded onto the vessel at the origin port. From there, the buyer arranges and pays for freight and bears the risk.
What is the difference between FOB and CIF?
Under FOB the buyer arranges freight from the origin port; under CIF the seller arranges and pays freight and insurance to the destination port. CIF is convenient but the seller's freight rate is often higher than the buyer could get.
What does DDP mean?
DDP (Delivered Duty Paid) means the seller is responsible for everything — including import duties and taxes — until the goods reach the buyer's door. It gives the buyer a simple all-in price.
Which Incoterm should I use importing from China?
FOB is the most common and usually the best balance, giving you control of freight while the seller handles origin export. Plutonia can advise the right term for your shipment.