Incoterms (FOB, CIF, DDP)
Incoterms are international trade terms that define who pays for and is responsible for goods at each stage of shipping.
Incoterms are published by the International Chamber of Commerce. They set when costs and risk pass from seller to buyer, which directly affects your landed cost.
Common terms include EXW (buyer handles almost everything), FOB (seller loads goods onto the ship, buyer pays freight onwards), CIF (seller pays freight and insurance to the destination port) and DDP (seller delivers with duty and taxes paid).
Example
A supplier quotes 8.00 FOB Shenzhen. You still pay sea freight, insurance, import duty and local delivery, so your landed cost will be higher than the quote.
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Common questions
Which Incoterm is best for small importers?
FOB is common because it gives the buyer control of freight; DDP is simplest but often more expensive.
Do Incoterms decide who pays import duty?
Yes. Under DDP the seller pays; under most other terms the buyer does.