Incoterms 2020 Explained: All 11 Rules for Importing from China

Incoterms 2020 are the trade rules that decide, in a few letters on your purchase order, who pays for each part of the journey and when the risk passes from your supplier to you. For importers buying from China, the choice between EXW, FOB, CIF, DAP and DDP changes your total cost, how much control you have over the shipment and who deals with customs. This guide explains all 11 Incoterms 2020 rules, shows where the risk passes for each, compares CIF vs FOB, explains DDP, and helps you choose the right term.

Key points
• Incoterms are published by the International Chamber of Commerce (ICC). Incoterms 2020 is the current edition and has 11 rules.
• Each rule sets who pays for transport, export and import clearance, and where the risk passes from seller to buyer. It does not cover payment terms or ownership of the goods.
• Seven rules work for any mode of transport; FAS, FOB, CFR and CIF are for sea and inland waterway only.
• From China, the most used terms are EXW, FOB, CIF, DAP and DDP. FOB is the most common choice for importers who want to control the freight.
• Always write the rule, a named place and the edition, for example “FOB Shenzhen, Incoterms 2020”.

What Are Incoterms?

Incoterms (International Commercial Terms) are standard rules for international sales contracts. Instead of listing every cost and responsibility, buyer and seller agree on a three-letter term and a place, and the rule fills in the details: who books and pays the transport, who clears the goods for export and import, who pays duties, and at which point the risk of loss or damage moves to the buyer.

Incoterms do not decide the price, the payment method (for example a deposit and balance, or a letter of credit), who owns the goods, or what happens if the contract is broken. Those belong in the rest of your purchase contract.

All 11 Incoterms 2020 Rules

Export clearance in China is the seller’s job under every rule except EXW. Note that in China export declarations must be made by a company registered with Chinese customs, so even on EXW the supplier or a forwarder handles it. See FOB vs EXW.

Where the Risk Passes: Incoterms 2020 at a Glance

The 5 Incoterms Most Used When Buying from China

EXW (Ex Works)

The supplier makes the goods ready at the factory and you take over from there: pickup, export clearance, freight, import clearance and delivery. The price looks lowest, but you pay everything after the factory gate. EXW works well when your forwarder collects from several suppliers and ships them together. See FOB vs EXW.

FOB (Free On Board)

The supplier pays for trucking to the port, export customs and loading on the ship. You book and pay the ocean freight and everything after it. Risk passes when the goods are on board at the Chinese port. FOB is the most common term for sea freight from China, because you choose the forwarder and the freight price.

CIF (Cost, Insurance and Freight)

The supplier also pays the ocean freight and a basic insurance policy to your port. But the risk still passes to you when the goods are loaded in China, and you pay the destination charges, import clearance and delivery.

DAP (Delivered at Place)

The supplier delivers to your named address. You clear customs and pay import duty and taxes on arrival.

DDP (Delivered Duty Paid)

The supplier delivers to your address with duty and import taxes paid. It is the simplest for the buyer, but the price includes everything, so compare it with the landed cost of other terms. See DDP vs DAP vs EXW.

Shipping by air, express or in containers handed over at a warehouse? See our guide to FCA Incoterms (Free Carrier), the term the ICC recommends instead of FOB for containers.

CIF vs FOB: Which Is Better for Importers?

CIF looks convenient because the price includes freight, but the risk passes at the same point as FOB, and you have no say in the shipping line, the schedule or the agent at destination. Some CIF prices are kept low because the destination agent charges high fees on arrival, which you must pay to collect the goods. For most importers, FOB with your own forwarder gives a clearer total cost. CIF can make sense for a first small order if the supplier has a reliable forwarder and you check the destination charges in advance.

For a full breakdown of CIF costs, hidden destination charges and a CIF vs FOB vs CFR comparison, see our guide to CIF meaning in shipping.

CIF Incoterms: What the Insurance Covers

Under CIF, the seller must buy insurance for at least 110% of the contract value, but only at the minimum level, Institute Cargo Clauses (C), which covers major events such as fire, sinking or a vessel collision, not theft or most damage in handling. For valuable goods, ask for wider cover or buy your own. The ICC also notes that CIF and FOB are meant for goods loaded directly on a ship; for containers handed over at a terminal, CIP and FCA fit better. Under CIP, Incoterms 2020 requires the wider Institute Cargo Clauses (A).

DDP Incoterms: The Seller Does Everything

DDP puts the most work and risk on the seller: transport, export and import clearance, duty and import taxes, up to your address. Someone has to act as importer in your country, which can be the seller, its forwarder or, in some arrangements, you. In the USA, for example, duty on Chinese goods can be a large part of the cost; see importing from China to the USA. For the UK and Canada, import VAT and GST also apply; see our guides to the UK and Kanada.

Many importers buy FOB or EXW from the supplier and book DDP shipping with a forwarder, so they get a duty-paid door price without depending on the supplier’s logistics.

What Changed in Incoterms 2020

• DAT became DPU. The unloading point can now be any place, not only a terminal.
• FCA and the bill of lading. Buyer and seller can agree that the buyer’s carrier issues an on-board bill of lading to the seller, which helps with letters of credit. See bill of lading explained.
• Higher insurance under CIP. CIP now requires Institute Cargo Clauses (A); CIF stays at (C).
• Own transport allowed. Under FCA, DAP, DPU and DDP, the buyer or seller may use its own vehicles.
• Security costs are allocated more clearly between buyer and seller.

The ICC usually revises Incoterms about every ten years. Until a new edition is published and named in your contract, Incoterms 2020 is the version to use, and a contract always follows the edition it names.

Which Incoterm Should You Choose?

Whatever you choose, write the full term in the purchase order and the proforma invoice, for example “FOB Shenzhen, Incoterms 2020”, so there is no doubt about the place and the edition. Customs also uses the term: the US, for example, charges duty on the FOB value, while the UK and the EU include freight to the border. The HS code and the invoice value should match on every document.

How JIEYI Works with Your Incoterm

We are a freight forwarder in Dongguan. Whatever term you agree with your supplier, we pick up the shipment at the right point: from the factory under EXW, at the port under FOB, or door to door with duties paid under our DDP service. Send us your supplier’s address and the term on your order, and we quote the rest of the journey.

Ask us for a quote based on your Incoterm.

New to freight jargon? Our shipping terms glossary explains more than 60 common terms in plain English.

For a closer look at one of the most common delivered terms, read our guide to DAP Incoterms (Delivered at Place).

Incoterms 2020: FAQ

How many Incoterms are there in 2020?

Eleven: EXW, FCA, CPT, CIP, DAP, DPU and DDP for any mode of transport, and FAS, FOB, CFR and CIF for sea and inland waterway.

What is the difference between CIF and FOB?

Under FOB, the buyer books and pays the ocean freight; under CIF, the seller pays the freight and minimum insurance to the destination port. In both, the risk passes to the buyer when the goods are on board in the port of loading.

Is DDP an Incoterm?

Yes. DDP (Delivered Duty Paid) is one of the 11 Incoterms 2020 rules. The seller delivers to the buyer’s named place with import duty and taxes paid.

Do Incoterms decide when I pay my supplier?

No. Incoterms cover delivery, costs and risk. Payment terms, such as a deposit and balance before shipment, are agreed separately in the contract.

Which Incoterm is best for importing from China?

For most sea shipments, FOB with your own forwarder gives the clearest cost and control. EXW suits buyers consolidating several suppliers; DDP suits buyers who want one delivered price.

The Incoterm you agree must also appear on your commercial invoice.

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Checked on October 26, 2026. Incoterms® is a trademark of the International Chamber of Commerce; this guide is a plain-language summary, not the official text. Send us your order details and Incoterm for a door-to-door quote.