Shipping from China: Incoterms Explained for Importers

Understanding Incoterms is essential for any importer sourcing from China. Choosing the wrong term can mean unexpected costs, disputed liability, or cargo stranded at port. Here is what you need to know.

What Are Incoterms?

Incoterms (International Commercial Terms), published by the International Chamber of Commerce (ICC), are standardized three-letter codes that define the responsibilities, costs, and risks between buyer and seller in international trade. The current version is Incoterms 2020.

Most Common Terms for China Sourcing

EXW (Ex Works)

The seller makes goods available at their factory or warehouse. The buyer bears ALL costs and risks from that point — loading, inland transport, export clearance, ocean freight, insurance, and import clearance.

**When to use:** Only if you have your own logistics team in China. NOT recommended for first-time importers.

**Risk:** You are liable even before goods leave the factory gate.

FOB (Free On Board) — Most Common

The seller delivers goods onto the vessel nominated by the buyer at the port of origin. The seller handles export clearance. Risk transfers when goods are on board.

**When to use:** This is the default for most China sourcing. The seller handles export; you control ocean freight and insurance.

**Pro tip:** Always specify the exact port — "FOB Qingdao" or "FOB Ningbo" — not just "FOB China."

CIF (Cost, Insurance, Freight)

The seller pays for goods, insurance, and freight to the destination port. Risk transfers at origin, but the seller pays until destination.

**When to use:** Convenient for small shipments or when you want one invoice. However, the seller chooses the insurer — you may get minimal coverage.

**Caution:** CIF can be more expensive than arranging freight and insurance yourself.

DDP (Delivered Duty Paid) — Maximum Seller Responsibility

The seller delivers goods to your named place, cleared for import, with all duties and taxes paid.

**When to use:** When you want door-to-door service with no surprises. Common in e-commerce and small B2B shipments.

**Note:** Chinese suppliers rarely offer true DDP for large orders. Work with a freight forwarder instead.

Our Recommendation for Most Importers

How RUIDA Helps

We manage the EXW-to-FOB handover seamlessly. We coordinate with the factory for inland transport, port delivery, export documentation, and ensure the handover to your nominated forwarder is clean. No missing documents. No last-minute surprises at port.

Contact us to discuss the best shipping strategy for your next order.