The Ultimate Guide to International Shipping Trade Terms (Incoterms)
Understand Incoterms like EXW, FOB, CIF, DDP & more to avoid confusion, reduce costs, and streamline global freight shipments.
What Are Incoterms?
Incoterms (International Commercial Terms) are globally recognized trade terms defined by the International Chamber of Commerce (ICC). They clarify who is responsible for transportation, insurance, duties, and risks at different stages of international trade.
Whether you’re an importer ou exporter, knowing the right Incoterm for your shipment helps prevent delays, legal disputes, and hidden fees.
Pourquoi les Incoterms sont-ils importants ?
- Define who pays for freight, insurance, customs, and port charges
- Establish the point of risk transfer from seller to buyer
- Determine who arranges transportation and documentation
- Avoid costly misunderstandings in international contracts
Common Incoterms Explained (2020 Edition)
| Terme | Full Form | Seller Responsibility | Buyer Responsibility | Common Use |
|---|---|---|---|---|
| EXW | Départ usine | Minimum (goods at seller’s premises) | All transport & clearance | Domestic pickups, buyer has freight control |
| FOB | Franco à bord | Until goods are loaded on vessel | Freight & import clearance | Sea freight, commonly used with China exports |
| CFR | Coût et fret | Export + main carriage | Insurance + import costs | Bulk shipments where buyer arranges insurance |
| CIF | Cost, Insurance, and Freight | Export, sea freight, insurance | Import clearance & duties | Buyer wants seller to arrange marine insurance |
| DAP | Delivered at Place | All transport to named place | Import duties & clearance | E-commerce, B2B deliveries |
| DDP | Rendu droits acquittés | All costs including duties & taxes | Receive goods | Turnkey delivery, ideal for buyer convenience |
When to Use Each Term
Utilisation EXW Quand :
Buyer has strong logistics knowledge or their own freight forwarder.
Shipment starts from seller’s entrepôt or factory.
Utilisation FOB ou CFR/CIF Quand :
You’re shipping via ocean freight.
Seller can bring goods to port but buyer handles destination logistics.
Utilisation DAP/DDP Quand :
You want seamless livraison à domicile.
Buyer wants minimal responsibility and no customs handling.
Key Differences: DDP vs DDU
| Fonctionnalité | DDP (rendu droits acquittés) | DDU (rendu droits non acquittés) |
|---|---|---|
| Taxes & Duties | Paid by seller | Paid by buyer |
| Buyer Involvement | Minimal | Must handle customs clearance |
| Delivery | Hassle-free | Delays possible |
| Idéal pour | Small businesses, first-time importers | Experienced buyers with local brokers |
Best Practices for Using Incoterms
Toujours include Incoterms in the sales contract with place name (e.g., FOB Shanghai).
Ensure your freight forwarder understands the Incoterm agreed upon.
Sellers: Avoid choosing DDP if unfamiliar with buyer country’s customs rules.
Buyers: Calculate landed cost including duties, taxes, and handling fees.
Incoterms Visual Comparison Chart
| Fonctionnalité | FOB | CIF | DDP |
|---|---|---|---|
| Frais de transport pris en charge par | Acheteur | Vendeur | Vendeur |
| Assurance prise en charge par | Acheteur | Vendeur | Vendeur |
| Import Duties | Acheteur | Acheteur | Vendeur |
| Delivery Location | Port in Buyer’s country | Port in Buyer’s country | Final destination (door) |
| Risk Transfer | At origin port | At origin port | At destination (door) |
With decades of experience in global freight forwarding,CHINE BRF LOGISTICS helps exporters and importers navigate Incoterms, arrange smooth deliveries, and reduce cross-border trade risks.
Foire aux questions (FAQ)
Q1: Which Incoterm is best for sea freight from China?
FOB and CIF are the most commonly used Incoterms for ocean freight shipments from China.
Q2: What’s the safest term for a new importer?
DDP is the safest as the seller takes care of everything, including duties and taxes.
Q3: Are Incoterms legally binding?
Incoterms are not laws but become legally binding once included in a signed contract.