All 11 Incoterms 2020 rules in one place: what each one means, exactly where risk passes from seller to buyer, and who pays for freight, insurance and duties. Built for importers sourcing from China who need a fast, accurate answer before they quote a contract.
Ordered by how much responsibility the seller carries, from EXW (least) to DDP (most).
Seller makes the goods available at their own premises (factory, warehouse). From there, the buyer handles everything: loading, export clearance, and all transport.
Seller delivers the goods, cleared for export, to a carrier nominated by the buyer at a named place: the seller’s premises or another location.
Seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment (on the quay, say, or a barge).
Seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment.
Seller pays the cost and freight to bring the goods to the named port of destination. Risk passes earlier though: at the port of shipment.
Same as CFR, but the seller must also procure minimum cargo insurance for the buyer’s benefit.
Seller pays the freight to carry the goods to the named destination. Risk passes earlier though: when the goods are handed to the first carrier.
Same as CPT, but the seller must also procure higher-level cargo insurance for the buyer’s benefit.
Seller delivers when the goods are placed at the buyer’s disposal on the arriving means of transport, ready for unloading, at the named destination.
The only Incoterm where the seller is responsible for unloading: the goods must be unloaded and placed at the buyer’s disposal at the named destination.
Maximum seller obligation. The seller delivers the goods cleared for import, duties paid, ready for unloading at the named destination.
A quick side-by-side of the six main cost categories across all 11 rules.
| Term | Export packing & loading | Export customs clearance | Main carriage freight | Cargo insurance | Import customs & duties | Unloading at destination |
|---|---|---|---|---|---|---|
| EXW | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer |
| FCA | Seller | Seller | Buyer | Buyer* | Buyer | Buyer |
| FAS | Seller | Seller | Buyer | Buyer* | Buyer | Buyer |
| FOB | Seller | Seller | Buyer | Buyer* | Buyer | Buyer |
| CFR | Seller | Seller | Seller | Buyer* | Buyer | Buyer |
| CIF | Seller | Seller | Seller | Seller (min.) | Buyer | Buyer |
| CPT | Seller | Seller | Seller | Buyer* | Buyer | Buyer |
| CIP | Seller | Seller | Seller | Seller (full) | Buyer | Buyer |
| DAP | Seller | Seller | Seller | Risk-bearer* | Buyer | Buyer |
| DPU | Seller | Seller | Seller | Risk-bearer* | Buyer | Seller |
| DDP | Seller | Seller | Seller | Risk-bearer* | Seller | Buyer |
* Insurance is only a named obligation under CIF and CIP. On every other term, Incoterms 2020 doesn't require either party to insure the cargo. Whichever party is carrying the transit risk at that point (marked “Risk-bearer” for DAP/DPU/DDP) typically decides whether to buy cover. Confirm that in the sales contract.
In our experience, most first-time importers sourcing from China start with FOB. It's the quotation format most factories default to. The price stays transparent: ex-factory cost plus inland freight to the port. And you're free to shop for your own freight forwarder and insurance. The trade-off is that you take on arranging international freight, customs clearance and import duties yourself, or through a sourcing agent.
DDP is the low-effort option: your supplier (or their forwarder) handles the shipment door to door, duties included. It's convenient for a first, small-volume order. But the all-in price is harder to audit line by line. We've seen orders get held up because nobody confirmed upfront who's liable if customs reclassifies the goods or duties land higher than quoted. Nail that down before you commit.
There's no universally "right" answer. It depends on whether you already have a freight forwarder you trust, how comfortable you are with customs paperwork, and how much price transparency matters to you on this order.
For small purchase volumes, we recommend DDP without hesitation. One price, delivered to your door, customs handled. You focus on marketing and selling. That’s where your time actually makes money. Once your volumes grow and you have your own freight setup, FOB starts to make sense. Not before.
Under FOB, the buyer arranges and pays for main ocean freight and insurance. Under CIF, the seller pays for freight and minimum-cover insurance on the buyer's behalf. But risk still transfers to the buyer at the same point in both terms: when the goods are on board the vessel. The seller pays more under CIF. They don't carry more risk.
EXW (Ex Works). The seller’s only job is to make the goods available at their own premises. From there, the buyer arranges export clearance, all transport, and import clearance. It’s the minimum obligation for the seller, the maximum for the buyer.
Under DDP (Delivered Duty Paid), the seller is responsible for import customs clearance and pays the duties and taxes, delivering the goods ready for unloading at the named destination. It’s the maximum obligation for the seller.
No. Incoterms only define delivery, the point risk transfers, and how transport-related costs are split between buyer and seller. They do not set the price, payment terms, or when legal ownership (title) passes. Those get agreed separately, in the sales contract.
Mangors has been sourcing and shipping from China since 2012. Send us your product and destination. We'll walk you through the trade term that fits. The quote's always free.
