Incoterms explained for importers: EXW, FCA, FOB, CFR, CIF, DAP, DDP
An Incoterm is a three-letter code in your supplier’s quote that says who pays for what and where the risk passes. For most small importers shipping from China, FOB (supplier delivers to the port) gives you the most control and the clearest price comparison.
The seven you will meet
| Term | Supplier pays for | You pay for | Risk passes to you |
|---|---|---|---|
| EXW Ex Works | Goods ready at their premises | Pickup, export clearance, sea freight, everything after | At the factory |
| FCA Free Carrier | Delivery to your carrier and export clearance | Sea freight and everything after | When handed to your carrier |
| FOB Free on Board | Delivery on board the ship and export clearance | Sea freight, NZ charges, duty, GST | On board at the origin port |
| CFR Cost and Freight | Sea freight to the NZ port | Insurance, NZ charges, duty, GST | On board at the origin port |
| CIF Cost, Insurance, Freight | Sea freight and minimum insurance to the NZ port | NZ charges, duty, GST | On board at the origin port |
| DAP Delivered at Place | Freight and delivery to your address | Customs clearance, duty, GST | At your address, ready to unload |
| DDP Delivered Duty Paid | Everything including NZ duty and GST | Nothing further | At your address |
Which should you ask for?
FOB is the usual choice: you pick your own forwarder, compare freight honestly, and the supplier’s price covers only the goods and getting them on the ship. EXW looks cheapest but hides pickup and export clearance costs in China. CIF and CFR bundle freight into the supplier’s price, which makes it harder to see what you are paying. DDP is convenient for very small orders but makes it harder to claim GST and to prove origin.
How ClearLane treats each one
Under FOB and FCA, the calculator prices ocean freight and all New Zealand charges. Under EXW it flags that origin pickup is extra. Under CFR and CIF it leaves ocean freight out because it is already in your invoice. Under DAP it prices customs clearance only, and under DDP there is nothing to quote.
Upload your supplier invoice and see freight, duty, GST and cost per unit.
Get a freight quoteQuestions
What Incoterm should I use when importing from China?
FOB is the most common choice for small importers: the supplier gets the goods on the ship, and you control freight and insurance.
Does CIF mean I do not need insurance?
Under CIF the supplier buys only minimum cover (Clauses C), which excludes theft and water damage. Many importers add their own cover.