What are Incoterms?
INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. It is essential that you are aware of your terms of trade prior to shipment.
EXW — EX WORKS
“You pick it up from the factory. Everything after that is your problem.”
What it means
The supplier’s job ends when the goods are ready at their factory. You (or Importano) must arrange pickup, export clearance, shipping, import clearance, and delivery.
Who pays for what
- Supplier: Nothing after factory door
- You: Pickup, export docs, shipping, insurance, import duties, delivery
When to use it
- You have your own freight forwarder in China
- You want the absolute lowest product price
- You’re buying from multiple suppliers and consolidating yourself
The risk
High for most European importers. You handle export clearance in China — which requires local knowledge, Chinese language, and relationships. Without help, you risk customs delays, paperwork mistakes, and paying more than necessary.
How Importano helps
We handle pickup, export clearance, and consolidation in our Yiwu warehouse. You get EXW pricing from the supplier without the EXW headache.
FCA — FREE CARRIER
“We hand the goods to your carrier at an agreed place.”
What it means
The supplier delivers goods to a named place (usually their factory, a port, or a forwarder’s warehouse) and clears them for export. From that point, the carrier (your forwarder) takes over.
Who pays for what
- Supplier: Delivery to named place, export clearance
- You: Main carriage (shipping), insurance, import clearance, delivery
When to use it
- Containerized shipments (FCA has largely replaced FOB for containers)
- Multimodal transport (sea + rail + truck)
- You want flexibility on routing
The risk
Low for you. The supplier handles export; you control the main shipping. The main risk is choosing a reliable carrier for the long haul.
How Importano helps
We act as your local receiver. Supplier delivers to our warehouse, we inspect, consolidate, and hand over to your chosen carrier — or we become your carrier and handle the rest.
FAS — FREE ALONGSIDE SHIP
“The supplier brings goods to the port. You handle loading and everything after.”
What it means
The supplier delivers goods alongside the vessel at the named port of shipment. You handle loading onto the ship, export clearance, shipping, insurance, and everything else.
Who pays for what
- Supplier: Delivery to port quayside
- You: Loading, export clearance, shipping, insurance, import clearance, duties, delivery
When to use it
- Bulk cargo (grain, ore, oil) where loading equipment is specialized
- Rarely used for containerized general cargo
- You have a strong presence at the origin port
The risk
High. You handle export clearance and loading — both require local China knowledge most Europeans don’t have. If loading is delayed, you pay detention charges.
How Importano helps
We rarely see FAS in our business. If your supplier proposes it, we can step in and essentially convert it to FOB — we handle loading and export clearance for you.
FOB — FREE ON BOARD
“The supplier puts the goods on the ship. After that, it’s your shipment.”
What it means
The supplier delivers goods to the port, clears them for export, and loads them onto the vessel. Risk transfers to you once goods pass the ship’s rail.
Who pays for what
- Supplier: Delivery to port, export clearance, loading on vessel
- You: Ocean freight, insurance, unloading, import clearance, delivery
When to use it
- Sea freight only
- You want control over shipping (choose your own carrier, negotiate rates)
- You want the supplier’s responsibility to end at the port
The risk
Medium. You control shipping costs, but if the vessel is delayed or cargo damaged at sea, it’s your problem. You also rely on the supplier to actually load what they promised.
How Importano helps
We verify the supplier actually loaded what they promised. We document everything at the port — photos, quantities, container seal numbers. If something’s wrong, we catch it before the ship sails.
CFR — COST AND FREIGHT
“Like CIF, but without the insurance. You shoulder the risk at sea.”
What it means
The supplier pays to get goods to your port, but risk transfers to you at the ship’s rail in China. Unlike CIF, the supplier does NOT arrange insurance.
Who pays for what
- Supplier: Product, shipping to your port
- You: Insurance, risk from ship’s rail in China, unloading, import clearance, duties, delivery
When to use it
- Sea freight only
- You have your own cargo insurance
- You want supplier-handled shipping but control your own coverage
The risk
HIGH. No insurance arranged by supplier. If you forget to buy your own coverage and the ship sinks, you lose everything.
How Importano helps
We strongly recommend buying cargo insurance if your supplier offers CFR. We can arrange full-cover insurance through our brokers — usually cheaper and better than supplier-provided CIF insurance.
CIF — COST, INSURANCE & FREIGHT
“The supplier ships it to your port. Sounds easy — but read the fine print.”
What it means
The supplier pays for shipping and insurance to your named port. But risk transfers to you when goods pass the ship’s rail in China — NOT when they arrive.
Who pays for what
- Supplier: Product, shipping to your port, minimal insurance
- You: Risk from ship’s rail in China, unloading, import clearance, duties, delivery
When to use it
- Small orders where you don’t want to arrange shipping
- You trust the supplier’s shipping choice
- You’re buying from a single supplier, not consolidating
The risk
HIGH for inexperienced importers. The supplier chooses the cheapest shipping, not the best. Insurance is minimal (often just basic cover). If cargo is damaged, you fight with a Chinese insurance company. If the ship is delayed, you have no leverage.
How Importano helps
If your supplier insists on CIF, we inspect before shipment and document condition. If damage occurs, our report proves what left China — making insurance claims easier.
CPT — CARRIAGE PAID TO
“CFR, but works for any transport mode — sea, air, rail, truck.”
What it means
The supplier pays for carriage to the named destination. Risk transfers when goods are handed to the first carrier (not when they arrive).
Who pays for what
- Supplier: Product, main carriage to destination
- You: Risk from first handover point, insurance, import clearance, duties, unloading
When to use it
- Multimodal shipments (rail from China to Europe, for example)
- Air freight
- When CIF/CFR don’t apply because it’s not pure sea freight
The risk
Medium. Similar to CFR — you bear risk during transit, and no insurance is included.
How Importano helps
For rail shipments (China-Europe), CPT is common. We track the container at every border crossing and keep you updated. If delays happen (common at borders), we know before you do.
CIP — CARRIAGE AND INSURANCE PAID TO
“CPT plus insurance. The all-mode version of CIF.”
What it means
The supplier pays for carriage AND insurance to the named destination. Risk still transfers at the first handover point, but at least insurance is covered.
Who pays for what
- Supplier: Product, main carriage, insurance
- You: Risk from first handover point, import clearance, duties, unloading
When to use it
- Air freight or rail freight where you want insurance included
- Multimodal shipments where CIF doesn’t apply
The risk
Medium-High. Insurance is included, but it’s usually minimal. Risk transfers early — before goods even leave China.
How Importano helps
We review the insurance certificate your supplier provides. Often it’s underinsured or has exclusions. We recommend topping up with full-cover cargo insurance for high-value shipments.
DAP — DELIVERED AT PLACE
“The supplier delivers to your door. You unload and pay import duties.”
What it means
The supplier handles everything — pickup, shipping, export/import clearance — and delivers to your named address. You unload the goods and pay import duties and taxes.
Who pays for what
- Supplier: Everything to your door except unloading and import duties/taxes
- You: Unloading, import duties, VAT
When to use it
- You want zero logistics hassle
- You’re new to importing and don’t want to manage shipping
- The supplier has reliable European logistics
The risk
Medium-High. You’re locked into the supplier’s logistics chain. No visibility, no control, usually higher total cost. You also handle unloading — if you don’t have a forklift or dock, problems start when the truck arrives.
How Importano helps
We rarely recommend DAP for European importers — you’re paying a premium for convenience you don’t need. FOB/FCA + our consolidation service usually costs less and gives you more control.
DPU — DELIVERED AT PLACE UNLOADED
“Like DAP, but the supplier also unloads the truck at your warehouse.”
What it means
Same as DAP, but the supplier’s responsibility includes unloading the goods at the named place. Risk transfers only after unloading is complete.
Who pays for what
- Supplier: Everything including unloading at your door
- You: Import duties, VAT
When to use it
- You don’t have unloading equipment (forklift, loading dock)
- Small warehouse where unloading is difficult
- You want the supplier’s responsibility to continue until goods are off the truck
The risk
Medium-High. Same as DAP — supplier controls logistics, higher cost, less visibility. Plus: unloading requires coordination (what time, what equipment, who signs). Delays at your warehouse can cause detention charges.
How Importano helps
DPU is uncommon in our experience. If your supplier offers it, make sure they coordinate unloading time precisely — detention charges if the truck waits are usually your problem. We can review the contract to clarify who pays what if unloading is delayed.
DDP — DELIVERED DUTY PAID
“The supplier does absolutely everything — including paying your import taxes.”
What it means
The supplier handles pickup, shipping, export/import clearance, AND pays all import duties and taxes. Goods arrive at your door with nothing left to pay.
Who pays for what
- Supplier: Everything — including your import duties and taxes
- You: Just unload the goods
When to use it
- You want a single all-inclusive price with zero surprises
- Small samples or urgent shipments where simplicity matters
- You’re buying from a supplier with established EU logistics and VAT registration
The risk
HIGH hidden risks. Supplier may not have EU VAT registration — if they don’t, DDP is technically impossible. You have zero control over shipping method, timing, or route. Usually the most expensive option (supplier builds margin into the price). Hard to compare quotes (apples to oranges with EXW/FOB pricing).
How Importano helps
DDP can work for small orders, but for container shipments we almost always recommend FOB/FCA. Here’s why: with DDP, the supplier controls everything. If they choose a slow ship, if customs delays happen, if duties are miscalculated — you have no leverage. With FOB + Importano, you see every step.