Incoterms 2020 Explained for First-Time Importers
A plain-language breakdown of FOB, CIF, DDP, and the other Incoterms you'll see on a Chinese supplier's quote.
Incoterms decide who pays for what, who is responsible at each stage, and where the risk transfers. Getting them wrong costs money quietly.
FOB (Free On Board) is the most common term for ocean freight from China. The supplier covers everything up to the ship's rail at the loading port; you handle freight, insurance, and import.
CIF (Cost, Insurance, Freight) adds ocean freight and basic insurance to the supplier's responsibility. Useful when you want a delivered-port price but still control import clearance.
DDP (Delivered Duty Paid) is door-to-door. The supplier or a logistics partner handles freight, duties, and last-mile delivery. Simple for the buyer, but rarely the cheapest option.
The right Incoterm depends on your freight forwarder relationship, cash flow, and how much of the logistics chain you want to manage yourself.
