Incoterms (International Commercial Terms)

Q: Which Incoterm should I use for sea freight from China?

The most common Incoterms for Chinese exports are FOB and CIF. FOB (Free On Board) — the seller delivers to the port and loads onto the vessel; the buyer arranges ocean freight. This gives the buyer control over carrier selection and costs. CIF (Cost, Insurance, Freight) — the seller arranges ocean freight and insurance to the destination port. For door-to-door service, DAP or DDP are increasingly popular. We help clients choose the optimal Incoterm for each trade lane and cargo type.

Q: What's the difference between EXW and DDP?

EXW (Ex Works) and DDP (Delivered Duty Paid) are opposite extremes. Under EXW, the buyer bears ALL costs and risks from the seller's premises — including loading, export clearance, freight, insurance, import clearance, and final delivery. Under DDP, the seller bears ALL costs and risks — including import duties and taxes — and the buyer simply receives the goods. EXW maximizes seller convenience; DDP maximizes buyer convenience. Most transactions use intermediate terms (FOB, CIF, DAP).

Q: Which Incoterm is best for dangerous goods shipments?

For DG shipments, we typically recommend FOB, CIF, or DDP — terms where an experienced forwarder manages the ocean/air transport leg. DG shipments require DG Packaging Certificates, maritime declarations, and IMDG-compliant stowage — tasks best handled by a forwarder with DG expertise. EXW for DG cargo is risky because the buyer must manage DG export compliance from a distance. DDP is increasingly popular for DG as it transfers all compliance responsibility to the seller's forwarder.

Last updated: June 14, 2026

Key Takeaways

Incoterms are ICC-published rules defining buyer and seller responsibilities for delivery, insurance, and customs
Most common for China exports: FOB (buyer controls freight), CIF (seller arranges freight+insurance), DDP (full service)
Choosing the right Incoterm affects your costs, risks, and control over the shipping process

Back to Glossary

Incoterms (International Commercial Terms) are a set of 11 standardized trade terms published by the International Chamber of Commerce (ICC) that define buyer and seller responsibilities for delivery, insurance, customs clearance, and risk transfer in international sales contracts. The most common terms for China exports are FOB, CIF, DDP, DAP, and EXW.

Chinese: 国际贸易术语 (Guójì màoyì shùyǔ)

Common Incoterms for China Exports

EXW (Ex Works): Seller makes goods available at their premises. Buyer handles everything else — loading, export clearance, freight, insurance, import clearance. Minimal seller obligation. FOB (Free On Board): Seller delivers to the port and loads onto the vessel. Buyer arranges and pays for ocean freight and insurance. Most common term for Chinese exports — gives buyers control over carrier selection. CIF (Cost, Insurance, Freight): Seller arranges and pays for ocean freight and insurance to destination port. Simpler for buyers but less cost transparency. DAP (Delivered at Place): Seller delivers to a named destination, ready for unloading. Buyer handles import clearance. DDP (Delivered Duty Paid): Seller bears ALL costs including import duties and taxes. Maximum seller obligation, maximum buyer convenience.

Practical Example

A German importer buys CNC machine parts from a factory in Jinan. Under FOB Qingdao terms: the factory delivers parts to Qingdao port and loads them onto the vessel — their responsibility ends when the cargo crosses the ship's rail. The importer's forwarder (Great Hensen) arranges ocean freight, insurance, and destination services. Under CIF Hamburg terms: the factory would arrange and pay for freight and insurance to Hamburg — simpler for the importer but with less control over carrier choice and rates. Under DDP importer's warehouse terms: Great Hensen manages the entire chain including German import duties and final trucking.

Related Terms

DDP (Delivered Duty Paid) — seller bears all costs including import duties
B/L (Bill of Lading) — critical document under FOB and CIF terms
CY-CY — container yard shipping terms often paired with FOB

Frequently Asked Questions

Which Incoterm should I use for sea freight from China?

The most common terms are FOB and CIF. FOB gives the buyer control over carrier selection and costs. CIF is simpler for the buyer. For door-to-door service, DAP or DDP are increasingly popular. We help clients choose the optimal Incoterm — see our logistics FAQ for more.

What's the difference between EXW and DDP?

EXW (Ex Works) and DDP are opposite extremes. Under EXW, the buyer bears ALL costs and risks from the seller's premises. Under DDP, the seller bears ALL costs and risks including import duties. EXW maximizes seller convenience; DDP maximizes buyer convenience. Most transactions use intermediate terms (FOB, CIF, DAP).

Which Incoterm is best for dangerous goods shipments?

For DG shipments, we recommend FOB, CIF, or DDP — terms where an experienced forwarder manages the transport leg. DG shipments require DG Packaging Certificates, maritime declarations, and IMDG-compliant stowage. EXW for DG is risky because the buyer must manage DG export compliance from a distance. DDP is increasingly popular for DG.

Need Logistics Help?

We advise on the optimal Incoterms for your trade lane and cargo type. FOB, CIF, DDP — all available.

Contact Our Team → See Full Glossary →

David Wang
Senior Logistics Specialist, Great Hensen International Logistics. Expert in international trade terms, contracts, and shipping compliance.