FOB, CIF, EXW, DDP: Shipping Terms Explained

The one-sentence version

An Incoterm answers one question: at which point does responsibility (and cost) transfer from the seller to the buyer? Everything before that point is in the supplier's price; everything after it is on you.

The terms you'll actually see

Term	Seller covers	You cover	Transfers at
EXW	Goods, packed, at factory door	All transport, export clearance, freight, insurance, import	Factory door
FOB	Above + trucking to port + export clearance + loading	Sea/air freight, insurance, destination handling, import	Ship's rail at origin port
CIF	Above + freight + minimum insurance to destination port	Destination port fees, customs, delivery, import duty	Destination port
DAP	Above + delivery to your address (not duties)	Import clearance and duties	Your address
DDP	Everything including import duties	Nothing — receive the goods	Your address

What each term means in practice

EXW — cheapest quote, most hidden cost

The supplier's number looks lowest because it excludes everything. A buyer without a local agent in China often cannot even arrange export clearance themselves. EXW suits buyers who have their own forwarder and agent on the ground — which is exactly what a sourcing partner provides.

FOB — the workhorse

The most common term in Chinese export trade. You arrange and pay the main freight, the supplier handles everything up to loading it on the ship. You keep control of freight cost and choice of forwarder. Most experienced importers default to FOB.

CIF — convenient, watch the insurance

Supplier arranges freight to your port, including minimum insurance cover. Convenient, but you lose control of freight choice and the "minimum" insurance is genuinely minimal. For high-value cargo, insurance should be upgraded separately.

DDP — easiest for you, priced accordingly

Everything is handled, including import duties. The supplier (or their agent) takes on your country's tax and customs role, which carries real cost and complexity — reflected in the price. Common for small e-commerce shipments; less common for containers.

Rules of thumb

• First container order: FOB with a forwarder you trust, or DAP if you want fewer moving parts
• Comparing quotes: convert everything to the same term first — an FOB quote is genuinely more expensive than the EXW quote next to it, not cheaper
• Small e-commerce orders: DDP or sea/air express consolidation often makes more sense than container terms

How Supply666 quotes

We quote in the term you ask for, and we show what's included in plain language. If a client has no forwarder, we book freight and handle export documents as part of the service — the point is that you always know what the number covers.