Incoterms 2020 explained: which terms should I use?
Quick answerQuick mapping for ocean shipments: EXW (buyer does everything), FOB (seller to on-board at origin), CFR/CIF (seller pays freight / freight+insurance to destination port), DAP (seller delivers, buyer clears), DDP (seller clears and pays duty). Risk transfers on loading for FOB/CFR/CIF; at destination for DAP/DDP.
The four most common
FOB: default for containerised exports; buyer controls freight.
CIF: seller controls freight and minimum insurance; useful for payment leverage.
DAP: seller delivers to the named place, buyer clears import.
DDP: seller is effectively the importer of record.
Choosing sensibly
New buyers: CIF or CFR to keep release leverage.
Buyers with strong logistics: FOB.
E-commerce and small shipments: DDP where legally possible.
| Term | Freight | Insurance | Import clearance |
|---|---|---|---|
| FOB | buyer | buyer | buyer |
| CFR | seller | buyer | buyer |
| CIF | seller | seller (min) | buyer |
| DAP | seller | seller/buyer | buyer |
| DDP | seller | seller | seller |
Frequently asked questions
- Does the Incoterm affect my customs value?
- It affects which costs are included in the declared value; DDP and CIF include more than FOB.
- Should I state the year?
- Yes — "Incoterms 2020" — because obligations differ between versions.
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Related
qa/fob vs cif
qa/what is ddp shipping
Rates from China to all countries
Weekly China export freight index
Source: Juhe Zhuang rate platform (jhz56.com) market data and carrier documentation. Figures are reference ranges, not transaction prices; verify with your forwarder before booking.