FOB, CIF, DDP or EXW: which Incoterms® rule should you choose when importing from Asia?

On a quote from an Asian supplier, three letters next to the price change everything: what that price includes, who chooses the vessel, and who bears the loss if the goods are damaged. They designate an Incoterms® rule, published by the International Chamber of Commerce (ICC) to allocate tasks, costs and risks between seller and buyer.

Incoterms® is a trademark of the ICC; its use here implies neither a link with the ICC nor its endorsement. The version in force, Incoterms® 2020, contains 11 rules, which our complete guide to the Incoterms® 2020 rules details one by one. This one helps you choose, for imports from Asia to the European Union, the United Kingdom or North America.

What an Incoterms® rule sets, and what it does not

Each rule specifies where the goods are delivered, when the risk of loss or damage changes hands, who books and pays for transport, who handles export and import formalities, and who must insure.

It does not, however, set the price, the payment terms or the transfer of title. Nor does it say what happens if the products are non-compliant or delivered late: that falls under your sales contract.

The 11 rules form two families. Seven apply to any mode of transport: EXW, FCA, CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP, DPU (Delivered at Place Unloaded) and DDP. Four are reserved for sea and inland waterway transport: FAS (Free Alongside Ship), FOB, CFR and CIF.

The seven Incoterms® rules to know for importing from Asia

For imports from China, seven rules cover most situations (CFR and CIF share one row in the table). The interactive tool below compares them point by point.

EXW (Ex Works): the lowest price, on the face of it

The seller makes the goods available at its premises. Loading is at your cost and risk, and it does not have to handle export formalities: your freight forwarder (the organizer who books the freight and coordinates the parties involved) takes care of that, even though the supplier is best placed to do it.

The ICC notes that using EXW for exports can create accounting and tax complications for both parties, and recommends FCA instead whenever possible.

FCA (Free Carrier): the best fit for containers

The seller handles export formalities, then hands the goods over to your carrier: loaded onto your truck at its factory, or brought to the terminal on its own truck, ready to be unloaded. Risk passes at that point. The ICC presents FCA as the appropriate rule for containers and pallets.

Since 2020, the parties may also agree that the carrier issues the seller an "on board" bill of lading (B/L, Bill of Lading). Banks often require this under a letter of credit, a payment guaranteed by a bank against delivery of the shipping documents.

FOB (Free On Board): the benchmark for Chinese quotes

The seller delivers the goods loaded on board the vessel you have booked, at the named port. It is one of the most common quotations from Chinese suppliers.

Its limitation is practical. With containers, the supplier generally hands its box over to the terminal before loading, but under FOB it has only delivered once the goods are on board. In between, it retains the risk of a container it no longer controls. The ICC in fact presents FOB as the rule for bulk port-to-port shipments, and FCA as the rule for containers. If you stick with FOB, specify in writing who pays the terminal charges at origin.

CFR and CIF (Cost and Freight; Cost, Insurance and Freight): freight paid, risk not covered

The "C" rules have two distinct points: the seller pays the freight to the port of arrival, but risk transfers to you as soon as the goods are loaded on board at origin. If the container is damaged at sea, the problem is yours, even if the seller chose the carrier.

CIF adds insurance taken out by the seller, but minimal: Institute Cargo Clauses (C), for at least the contract price plus 10%. These standard clauses from the London insurance market come in several levels. Level (C) mainly covers major events (fire, sinking, grounding); theft, breakage or water damage are generally not covered.

Level (A), known as "all risks" (subject to exclusions), is required only under CIP, the equivalent of CIF for all modes of transport. CIP is in fact the rule the ICC considers suited to containers, while CIF was designed for port-to-port bulk cargo.

Another trap: unloading at the port of arrival is the seller's responsibility only if its transport contract provides for it. Otherwise, your seller's freight forwarder's local agent may bill you for THC (Terminal Handling Charges) and undocumented handling fees before releasing the Delivery Order (D/O).

DAP and DDP (Delivered at Place; Delivered Duty Paid): delivered to your warehouse

Under DAP, the seller arranges transport to the agreed place and retains the risk until arrival, with the goods ready for unloading. You unload, you clear customs and you pay duties and taxes.

Under DDP, the seller also clears customs on import and pays duties and taxes. The ICC warns that some countries prohibit a foreign entity from carrying out import formalities; DAP is then more suitable. Where it is permitted, the seller must organize locally:

• European Union: the declarant must in principle be established in the EU, except in cases such as occasional declarations (Article 170 of the Union Customs Code). In practice, a Chinese seller works through an indirect customs representative (who declares in its own name) established in the EU, with an EORI number (Economic Operators Registration and Identification).
• United Kingdom: an EORI number starting with GB is required, and a company without a UK establishment must entrust its customs formalities to a third party.
• United States: the importer of record remains responsible for the declaration, duties, taxes and fees, even when it uses a customs broker.
• Canada: a non-resident importer can register with the Canada Border Services Agency, after obtaining a business number from the Canada Revenue Agency.

Who chooses the freight forwarder: the real question

Behind the rule, the real issue is who controls transport. Under EXW, FCA and FOB, you book the main carriage; under CFR, CIF, DAP and DDP, the seller does, and therefore chooses the carrier, the departure date and the destination agent. The trade-off: under FOB or FCA, you need a freight forwarder able to take over in China, which often pushes first-time importers toward CIF or DDP, by default rather than by choice.

Customs duties: the Incoterms® rule does not change the basis of calculation

The value on which duties are calculated, known as the customs value, is set by the regulations of the destination country. The Incoterms® rule only determines what must be added to, or deducted from, the invoiced price.

The steps by region are detailed in our guide customs clearance on import: EU, UK, US.

Costed example: a 40' HC Yantian → Rotterdam under FOB, CIF and DDP

Benchmark: as of September 24, 2026, Drewry's World Container Index put the 40-foot Shanghai → Rotterdam rate at USD 3,485. This is a spot terminal-to-terminal rate, including the bunker adjustment factor (BAF) and other ocean surcharges, excluding inland transport. It changes every week: the amounts below are rounded and fictitious.

Under FOB, the customs value is USD 63,700 (goods, freight and insurance to Rotterdam), hence USD 2,548 in duties. Under CIF, the seller's freight looks cheaper, but the charges billed on arrival by its agent wipe out the saving. Under DDP, a single invoice, but about USD 2,500 more than under FOB.

Other markets: in the UK (arrival at Felixstowe), the calculation follows the EU logic. For a US importer (Yantian → Los Angeles), duties apply to the FOB price alone, i.e. USD 2,400 at the same fictitious rate, excluding additional duties and US-specific fees.

What the table does not show often weighs more:

• FOB: you choose the departure point and the carrier, you take out "all risks" cover, and every cost is known.
• CIF: the risk is yours from Yantian onward, with minimal insurance, and you choose neither the vessel nor the agent at destination.
• DDP: you see neither the seller's logistics margin, nor the declared value, nor who is the importer. If the arrangement fails, your goods stay stuck at the port.

The most common mistakes

Which Incoterms® rule fits your profile?

The common thread: an FOB or FCA price can be compared from one supplier to another, and freight is negotiated separately. A 3PL (third-party logistics) is a logistics provider that stores your products and ships your orders.

For an e-commerce seller, the destination is a 3PL or an Amazon FBA (Fulfilment by Amazon) warehouse, with its own labeling and appointment rules: see our guide preparing an Amazon FBA shipment from China. A regular importer can have orders from several suppliers consolidated into a single container: that is multi-supplier consolidation in China.

Our recommendation: buy FOB/FCA, receive "delivered to your warehouse"

We most often recommend separating two contracts. With the supplier, a FOB or FCA sales contract, for a net price. With a provider working for you, a service contract for everything else, all the way to your warehouse.

At NOVASEA, this second part covers pre-loading inspection, consolidation in China as close as possible to your factories, freight, all-risks insurance, customs clearance by a partner customs broker (customs broker) and final delivery: see our logistics page.

You keep the convenience of DDP (one point of contact, one landed cost to your warehouse announced in advance) without its blind spots: every cost is visible, and you stay in control of the declared value and of the choice of importer. That is our end-to-end service.