Incoterms for shipping from China
A practical guide for preparing your shipment enquiry.
Get a shipping quoteThe Incoterm you agree sets where your supplier's job ends. This guide explains EXW, FOB, DAP and DDP, and introduces CIF for sea freight. These terms sit inside Incoterms 2020 (ICC).
What are Incoterms 2020?
They are a set of eleven three-letter trade terms that clarify the tasks, costs and risks of delivering goods from seller to buyer. The ICC first published them in 1936, and UNCITRAL recognises them as the global standard. Incoterms 2020 is the ICC's most recent version. It came into effect on 1 January 2020. Always name the term and the place, such as "FOB Ningbo", and state the version.
What does EXW mean when I buy from China?
Under EXW the seller places the goods at your disposal at its premises or another named place. It does not have to load them, and it does not have to clear them for export. Check who loads the goods and who handles export clearance before you agree to EXW.
What does FOB mean for a sea shipment from China?
FOB is a rule for sea and inland waterway transport. The seller delivers the goods on board the vessel you nominate at the named port of shipment. Risk of loss or damage passes when the goods are on board the vessel. FOB suits a buyer who wants to control the carrier and see the freight rate separately.
What does CIF include, and is its insurance enough?
CIF means Cost, Insurance and Freight and is used for sea and inland waterway transport. The seller arranges and pays freight to the named destination port and contracts cargo insurance, while risk passes to the buyer when the goods are on board at shipment. Under Incoterms 2020, Institute Cargo Clauses (C) is the default insurance level; higher cover can be agreed.
Compare the named ports, freight scope and insurance terms before choosing CIF or FOB. Ask for the insured value, exclusions and claims procedure, and agree any extra protection with your seller. See ICC's CIF insurance explanation and HMRC's Incoterms guide.
What is the difference between DAP and DDP?
Both are delivered terms. Under DAP the goods are placed at your disposal on the arriving means of transport, and the seller bears all risks of bringing them to the named place. DDP goes further. The seller clears the goods for import, pays duty for both export and import, and carries out all customs formalities. For EXW, FOB or DAP, agree in writing who clears the goods for import.
| Term | Where the seller's job ends | Other points |
|---|---|---|
| EXW | Goods placed at your disposal at the seller's premises or another named place | Not loaded, not cleared for export |
| FOB | Goods on board the vessel you nominate at the named port of shipment | Risk passes when the goods are on board |
| DAP | Goods placed at your disposal on the arriving means of transport at the named place | Seller bears risks to the named place |
| DDP | Goods cleared for import on the arriving means of transport, ready for unloading at the named place | Seller pays duty and does the customs formalities |
When does DDP suit an importer?
DDP suits a buyer who wants one delivered price, such as on a first order or a delivery to a warehouse you do not control. Whoever clears the goods needs a customs ID. In the EU an EORI number is mandatory for clearing customs operations. An operator not established in the EU needs one to lodge customs declarations. For goods moving between Great Britain and another country, you may need a GB EORI. In the US, an importer needs an importer of record (IOR) number to make entry. It is an EIN, an SSN or a CBP-assigned number, set up on CBP Form 5106. Agree who is named as importer before you book.
Can I ask for sea DDP?
Yes. Sea DDP is an option to discuss for your cargo and destination. Ask for a written quote that states the agreed customs, duty, tax and delivery responsibilities, the included charges and cargo acceptance.
What should I put in my quote request?
Put the Incoterm and the named place first. Then give the origin, the destination country, city or port, the delivery postcode if you have one, the mode and delivery scope, the commodity, the number of packages, the packed gross weight and the dimensions per package. Add a requested date or any special handling, such as batteries or liquids.
Build your message on the shipping quote page, then choose “Open WhatsApp draft”, review it in WhatsApp and send it there. Choose "Sea DDP enquiry" to ask about the responsibilities and charges included.
Sources
- ICC — Incoterms rules
- ICC — Incoterms 2020
- ICC — Incoterms 2020 launch-date announcement
- HMRC — Incoterms
- European Commission — Economic Operators Registration and Identification number (EORI)
- GOV.UK — Get an EORI number
- CBP — Importer Create/Update Identity (CBP Form 5106) FAQ
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