Incoterms 2020 for importers: why FOB is not always the best choice

Incoterms are not about price. They are about allocating three things: costs, risks and control. Importers often choose a term out of habit and later discover they cannot influence routing or timing, because the seller appoints the carrier.

EXW: maximum control, maximum work

The seller simply hands the goods over at their premises. You handle everything, including export clearance in China — and a foreign entity cannot file a Chinese export declaration on its own. In practice your forwarder does it through a Chinese company, so EXW only works if you have a strong partner at origin.

FOB: the familiar compromise

The seller delivers to the port and clears export; you pay for the main carriage and choose the carrier. A sensible balance — but only for ocean shipments. For rail and road, FCA is the correct term: FOB formally applies only to sea and inland waterway transport.

CIF and DDP: convenient but costlier

Under CIF the seller chooses the line and the insurance; under DDP they even take on clearance in your country. That is convenient right up to the first disruption: you do not know the real freight rate, cannot influence the carrier and do not control the quality of the declaration. The seller's logistics mark-up is typically 8–15 %.

The rule is simple: the larger your volume, the closer to EXW/FCA you should move. On regular purchasing, control over logistics is worth more than the convenience of DDP.

One last point: an Incoterm is always stated with a named place and the edition — for example, «FCA Ningbo, Incoterms 2020». Without the place and the year the wording is legally incomplete, and in a dispute it will not be read in your favour.

Related services and routes

• Import customs clearance in Uzbekistan
• Ocean container freight from China
• Rail freight from China on FCA terms