What Are Incoterms®?
Incoterms® are standardized trade rules published by the International Chamber of Commerce. They help buyers and sellers define delivery obligations, cost allocation, risk transfer, carriage, insurance and customs responsibilities in a sales contract.
Who Pays?
Clarifies which party bears transport, handling, insurance and customs-related costs.
When Risk Transfers
Defines the delivery point where risk of loss or damage transfers from seller to buyer.
Who Clears Customs?
Allocates export and import formalities between the seller and the buyer.
Who Books Freight?
Shows whether the seller or buyer contracts the main international carriage.
Jump to the Incoterm You Need
EXW, FCA, FOB, CFR, CIF, DAP & DDP Explained
EXW — Ex Works
The seller makes the goods available at the named place, typically the factory or warehouse. The buyer takes on the broadest logistics responsibility.
- Buyer arranges pickup
- Buyer bears main freight
- Buyer handles import formalities
- Export formalities can be operationally difficult for an overseas buyer
FCA — Free Carrier
The seller delivers the goods to the carrier or another nominated person at the named place and handles export formalities.
- Useful for containerized exports
- Seller clears export
- Buyer contracts main freight
- Risk transfers at the agreed delivery point
FOB — Free On Board
The seller delivers the goods on board the vessel at the named port of shipment. The buyer arranges the ocean freight from that point.
- Seller handles export clearance
- Buyer pays main ocean freight
- Risk passes when goods are on board
- Traditionally used for port-to-port sea trade
CFR — Cost and Freight
The seller contracts and pays freight to the named destination port, but risk transfers earlier when the goods are delivered on board at origin.
- Seller pays ocean freight
- Buyer handles import formalities
- Seller is not required to buy cargo insurance
- Cost and risk transfer at different points
CIF — Cost, Insurance and Freight
CIF is similar to CFR, but the seller also contracts the required cargo insurance for the buyer's benefit.
- Seller pays ocean freight
- Seller arranges required insurance
- Buyer clears import
- Risk still transfers at origin when goods are on board
DAP — Delivered at Place
The seller delivers the goods to the named destination ready for unloading. The buyer generally handles import clearance and import duties/taxes.
- Seller arranges transport to destination
- Buyer unloads
- Buyer handles import formalities
- Common modern replacement for many old DDU use cases
DDP — Delivered Duty Paid
The seller carries the maximum Incoterms® obligation and is responsible for delivering to the named destination after completing required import formalities.
- Seller arranges main transport
- Seller handles export and import formalities
- Seller bears applicable import duties/taxes under the rule
- Buyer normally unloads at destination
DDU — Delivered Duty Unpaid
DDU is widely searched and still appears in commercial conversations, but it is not one of the current Incoterms® 2020 rules.
- Removed from the official rules in Incoterms® 2010
- DAP is the modern term for many comparable situations
- Use the exact current Incoterm in new contracts
- Always state the named place and rule version
The Complete 11 Incoterms® Rules
For Any Mode or Modes of Transport
- Road, rail, air, sea or multimodal transportation
- Suitable framework for containerized and multimodal transactions
For Sea & Inland Waterway Transport
- Designed around port-to-port maritime delivery points
- FOB, CFR and CIF require delivery on board the vessel
EXW vs FCA vs FOB vs CFR vs CIF vs DAP vs DDP
| Term | Main Freight | Export Clearance | Import Clearance | Insurance Requirement | Typical Delivery / Risk Point |
|---|---|---|---|---|---|
| EXW | Buyer | Buyer* | Buyer | No mandatory seller cover | Seller's named premises/place |
| FCA | Buyer | Seller | Buyer | No mandatory seller cover | Named place when delivered to carrier/person nominated by buyer |
| FOB | Buyer | Seller | Buyer | No mandatory seller cover | On board vessel at origin port |
| CFR | Seller | Seller | Buyer | No mandatory seller cover | Risk transfers on board at origin, although seller pays freight to destination |
| CIF | Seller | Seller | Buyer | Seller must arrange required cover | Risk transfers on board at origin, although seller pays freight/insurance to destination |
| DAP | Seller | Seller | Buyer | No mandatory seller cover | Named destination, ready for unloading |
| DDP | Seller | Seller | Seller | No mandatory seller cover | Named destination, ready for unloading |
*EXW places export-formality obligations on the buyer under the rule; practical local customs requirements may make FCA more workable for many international exports.
FCA or FOB for Containerized Cargo?
FOB remains extremely common in China trade, but the Incoterms® sea rules are built around delivery on board the vessel. For containerized cargo handed to a carrier or terminal before vessel loading, FCA can often match the physical delivery process more closely.
- Use the contract term that matches the real handover point
- Always add the exact named place or port
- Confirm who pays origin terminal and documentation charges
- Confirm the freight booking party before cargo is delivered
Write the Named Place Clearly
FCA: FCA Supplier Warehouse, Qingdao, China — Incoterms® 2020
FOB: FOB Qingdao Port, China — Incoterms® 2020
CIF: CIF Sydney, Australia — Incoterms® 2020
DAP: DAP Auckland Warehouse, New Zealand — Incoterms® 2020
DDP: DDP Dallas, Texas, USA — Incoterms® 2020, subject to importer/tax compliance.
Which Incoterm Should an Importer Choose?
The best term depends on your supplier agreement, logistics experience, destination customs structure, cargo type and how much control you want over freight.
Choose EXW / FCA
Useful when you want BRF SHIPPING to control pickup and international freight from China.
- Factory pickup
- Origin consolidation
- Freight under buyer control
Choose FOB
Common when the Chinese supplier is responsible through the agreed loading port and you control ocean freight.
- Supplier handles export
- Buyer controls main freight
- Sea shipments
Choose CFR / CIF
Useful when the seller contracts ocean transport to your destination port while you manage import clearance and local delivery.
- Seller pays main sea freight
- CIF includes required insurance
- Buyer handles destination import
Choose DAP / DDP
Useful for destination delivery when the parties want the seller to control more of the transport chain.
- Door delivery structure
- DAP: buyer handles import
- DDP: seller handles import formalities
Is DDU Still a Valid Incoterm?
DDU (Delivered Duty Unpaid) is a legacy Incoterm. It was removed when Incoterms® 2010 introduced DAP and DAT, and it is not part of Incoterms® 2020.
Why BRF SHIPPING Still Mentions “DDU”
- Many importers still search for “DDU shipping” online
- Some customers and suppliers still use the old wording informally
- BRF SHIPPING can clarify whether DAP, DPU or another current rule better matches the intended transaction
Incoterm Errors That Create Extra Shipping Cost
No Named Place
Writing only “FOB” or “DAP” is incomplete operationally. State the exact port, terminal, warehouse or destination.
Confusing Cost with Risk
Under CFR and CIF, the seller may pay freight to destination even though risk transfers much earlier at origin.
Assuming DDP Is Always Easy
DDP can create importer registration, tax, licensing and customs-compliance obligations for the seller in the destination country.
Using DDU in New Contracts
DDU is obsolete under current ICC rules. Use a current rule such as DAP when it matches the intended responsibilities.
Using FOB Automatically
For containerized cargo delivered to a terminal before loading, FCA may better reflect the actual handover point.
Ignoring Landed Cost
Compare freight, origin charges, destination charges, customs, duties/taxes, delivery and possible inspections before agreeing terms.
Match the Incoterm with the Right Logistics Service
EXW Pickup
Factory pickup, China trucking, warehouse receiving and export preparation.
Pickup in China →FCL / LCL Sea Freight
Full-container and consolidated ocean freight from major China ports.
Sea Freight →Air Freight
Urgent international cargo with pickup, export handling and destination delivery.
Air Freight →DAP / DDP Delivery
Door-to-door planning with customs and final-delivery coordination where suitable.
Door to Door →Frequently Asked Questions About Incoterms
What is the current version of Incoterms?
Is DDU still an Incoterm?
What is the difference between FOB and CIF?
What is the difference between DAP and DDP?
Which Incoterm is best when buying from China?
Does CIF mean the seller carries the risk until destination?
Do Incoterms decide ownership or payment terms?
Not Sure Whether to Use EXW, FOB, CIF, DAP or DDP?
Send us your supplier location, destination, cargo details and current quotation. BRF SHIPPING can help you compare the logistics responsibilities and build a practical freight solution.
- Brf Shipping has been in the logistics industry for more than 8 years.
- Reliable,fast freight forwarder from China to Thailand.
- Reliable,fast freight forwarder from China to Australia.
- Reliable,fast freight forwarder from China to New Zealand.
- Reliable,fast freight forwarder from China to the UK.
- Reliable,fast freight forwarder from China to the United States.
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