The Incoterms® rules define the obligation between buyers and sellers to deliver commodities under sales agreements. Here are the five most important Incoterms® rules when exporting or importing goods to or from China, what they mean, and their advantages and disadvantages.
1. What’s the meaning of FOB (Free on Board) in China?
Generally, FOB is the Incoterms® rule most often used if you’re importing from China. Here, the seller's responsibilities end when the goods board the ship transporting them to your chosen destination. The seller's delivery is completed when the goods are across the ship's rail.
2. What's the meaning of EXW (Ex Works) in China – and what are the pros and cons?
Ex Works means that the delivery is completed when the buyer picks up the goods from the seller at the named place, such as a warehouse or factory. The buyer takes over ownership and responsibilities once the goods are available for transport. This term is used for ocean freight and air freight.
We suggest you take serious consideration when you choose EXW in China. Dealing with inland transportation in China, customs clearance in Chinese ports, and other related issues may create a lot of work that needs to be managed.
3. What's the meaning of CIF (Cost, Insurance and Freight) in China?
The CIF Incoterms® rule is for sea and inland waterway transport. It’s when the buyer takes over ownership of the goods only at the destination port. The sellers control the freight. It has gradually become less recommended when importing goods from a Chinese supplier.
4. What's the meaning of CFR (Cost and Freight) in China?
CFR or Cost and Freight is another of the Incoterms® rules for sea and inland waterway transport. The difference between a CFR and CIF agreement is minimal.Under CIF, insurance must be provided by sellers. With CFR, insurance is optional.
If you choose to work under CFR in China as a buyer, clearly define and specify the insurance terms in the sales contract.
5. What is the meaning of DDP Shipping (Delivered Duty Paid) in China?
This term can be challenging for sellers. With DDP , the seller is obliged to cover everything during the freight. The buyer only needs to unload the goods at the final destination.
Incoterms® and the Incoterms® 2020 logo are trademarks of ICC. Use of these trademarks does not imply association with, approval of or sponsorship by ICC unless specifically stated above. The Incoterms® Rules are protected by copyright owned by ICC. Further information on the Incoterms® Rules may be obtained from the ICC website iccwbo.org.
FAQs
Free On Board (FOB), Cost, Insurance and Freight (CIF), and Ex Works (EXW) are among the most commonly used Incoterms in international trade, and understanding these terms is vital for a seamless trading experience. FOB is a type of agreement where the seller is required to deliver the goods on board a shipping vessel.
What are the most commonly used Incoterms in China? ›
Best Incoterms for Importing from China
WTA recommends that the consignee retains control of the shipment, allowing for full visibility of costs associated with the shipment. As a result, the FOB and Ex-Works Incoterms are the most commonly used and recommended Incoterms for importing from China.
What are five commonly used Incoterms? ›
2. Commonly used INCOTERMS
- EXW - Ex Works. ...
- FCA - Free Carrier. ...
- CPT Carriage Paid To. ...
- CIP - Carriage and Insurance Paid. ...
- DAT - Delivered at Terminal. ...
- DAP - Delivered At Place. ...
- DDP - Delivered Duty Paid. ...
- Maritime-only terms - These are only used for conventional sea or inland waterway transport:
What Incoterms should I use? For webshops that sell internationally, DAP (Delivered At Place) is the most commonly used Incoterm. DAP simply means that you as a seller pay the shipping costs, arrange the insurance and prepare export documents. The recipient pays any import and customs costs.
What are the 6 basic Incoterms? ›
Incoterms for any mode of transport: EXW, FCA, CPT, CIP, DPU, DAP and DDP; Incoterms only for sea and inland waterway transport: FAS, FOB, CFR and CIF.
What is the best way to ship from China? ›
Express shipping is the quickest and safest way to send bulky items from China, and the top express shipping companies include UPS, FedEx, TNT, and DHL. You can get your items in less than 5 days if you use express shipping. However, express shipping has a high price in exchange for its speed and dependability.
What is the most reliable shipping to China? ›
DHL is considered the leading carrier for overseas shipments and a great option for shipping to China. Their rates are slightly cheaper than UPS or FedEx while offering the same delivery windows. If you want to ship to China, consider DHL as one of your first options when checking shipping prices.
What is Cif shipping from China? ›
What's the meaning of CIF (Cost, Insurance and Freight) in China? The CIF Incoterms® rule is for sea and inland waterway transport. It's when the buyer takes over ownership of the goods only at the destination port. The sellers control the freight.
Which Incoterms is most popular? ›
Most used INCOTERMS in trade
- Ex Works (EXW): Ex-Works refers to a trade condition where sellers hand over the goods to buyers at their factory or exporting location. ...
- Free On Board (FOB): ...
- Cost & Freight (CFR): ...
- Cost Insurance & Freight (CIF): ...
- Delivered At Place (DAP): ...
- Delivered Duty Paid (DDP):
Best Incoterms for sellers
- CFR-CIF: Cost and Freight - Cost, Insurance and Freight. The CFR Incoterm and the CIF Incoterm are generally good options for the seller as they're competitive and do not involve too many risks. ...
- DDP-DAP: Delivered Duty Paid - Delivered at Place. ...
- FOB: Freight on Board.
The Incoterms more favorable to buyers are DAT, DAP, and DDP. With these “D terms,” the buyer is responsible for nothing until the goods arrive in the buyer's country.
What is best for international shipping? ›
11 best international shipping services in 2024
- DHL. ...
- UPS. ...
- PostNL. ...
- DB Schenker. ...
- DTDC. ...
- TNT. ...
- YRC Freight. ...
- Royal Mail. Royal Mail is renowned for its reliable shipping services covering over 230 countries and territories globally.
Currently, there are 11 Incoterms, each delineating distinct responsibilities and obligations between the buyer and seller. These terms fall into two main categories: those applicable to any mode of transportation (such as EXW, FCA, CPT) and those designed for sea and inland waterway transport (like FOB, CIF, DAT).
Who decides the Incoterms for a shipment? ›
An Overview of Incoterms® 2020. The Incoterms® are a set of 11 individual rules issued by the International Chamber of Commerce (ICC) which define the responsibilities of sellers and buyers for the sale of goods in international transactions.
What shipping service does China use? ›
Courier company, widely used in China is DHL, UPS, and FedEx. TNT is popular in Europe, but it's not so popular like the others in China. With courier service, you get fast delivery times and an online tracking facility. Most courier shipments take just 2~5 business days to arrive in anywhere around the globe.
What is the #1 trade export in China? ›
Machinery such as computers, broadcasting technology, and telephones as well as transport equipment make up the largest part of Chinese exports. This category amounted to approximately 1.69 trillion U.S. dollars in export value in 2022.
What is the most common shipping port in China? ›
Shanghai port
The world's largest and busiest port, Shanghai manages more than 25% of global shipping.
What is standard shipping from China? ›
Rules of thumbs for lead times (in regular conditions) are 1-2 weeks for regular post, 3 days for air express freight, 8-10 days for air freight, and 30-40 days for ocean freight. These estimates can be affected by a wide range of circ*mstances, so it's worth checking with your logistics provider.
