Home / Logistics Knowledge / Incoterms 2020 Explained: EXW, FOB, CIF, DDP & Which to Use
Incoterms are standardized trade terms that split cost and risk between buyer and seller. Get the right one and you control your shipment and your landed cost.
Published by the International Chamber of Commerce, Incoterms 2020 define 11 rules that allocate transport costs, insurance, and risk between buyer and seller. They do not cover title, payment, or import duty - only the delivery and movement responsibilities.
| Rule | Seller delivers when... | Risk transfers to buyer at... | Who pays main freight |
|---|---|---|---|
| EXW (Ex Works) | Goods are available at the seller's premises | Buyer collects from seller's door | Buyer |
| FOB (Free On Board) | Goods are loaded on the vessel at the port of shipment | Once loaded on board the vessel | Buyer |
| CIF (Cost Insurance Freight) | Goods loaded on board, seller pays freight and insurance to destination port | Once loaded on board the vessel | Seller (to destination port) |
| DDP (Delivered Duty Paid) | Goods cleared and delivered to the buyer's address | At final delivery | Seller (inclusive of duty) |
Under EXW the seller makes goods available at their premises and does little else. The buyer arranges pickup, export, freight, and import. It can look cheap but shifts the most responsibility, and export clearance, to you.
FOB is the most common starting point for China imports. The seller handles inland China transport and loading onto the vessel; you control the ocean or air main leg and destination. See our FOB vs EXW comparison.
Under CIF the seller pays freight and insurance to the destination port, but risk transfers when goods are loaded at origin. You still handle import clearance and last mile. The seller's freight rate is often marked up. See CIF vs FOB.
DDP delivers goods cleared through customs to your door, duty included. It is convenient but the seller builds duty and risk into the price, and you lose visibility over the import process. Read our DDP shipping guide.
FOB is a common choice because it balances control and simplicity: the seller handles origin, you control the main freight and destination.
No. Under CIF the seller pays freight and insurance to the destination port, but you still clear customs and pay duty and last-mile delivery.
The seller prepays duty and delivers to your door, but you remain the importer of record in most setups. The cost is built into the price.
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