Incoterms are boring and they also determine who pays if a container falls off a ship. If you're importing Chinese cars, three of them matter: FOB, CIF, and DDP. The plain-English version of what each one actually buys you.
Incoterms are boring and they also determine who pays if a container falls off a ship. If you're importing Chinese cars, three of them matter: FOB, CIF, and DDP. Here's the plain-English version of what each one actually buys you — and which you should prefer at which stage of your importing career.
Incoterms are international rules defining responsibility in a cross-border trade transaction. They answer: who pays for shipping, who insures the cargo, who handles customs on each side, and — most importantly — at what physical point the buyer takes ownership of (and responsibility for) the goods.
There are 11 Incoterms in the current (2020) revision. For Chinese vehicle imports, you'll encounter three in practice. The rest are mostly for container-of-grain or oil-tanker shipments where responsibility transfer is more complex.
Under FOB, the seller (us) is responsible for:
Once the vehicle is on the ship, the buyer takes over:
FOB Shanghai is our default quote. It's simplest for us (we do what we know) and cleanest for experienced importers (you control the ocean freight and insurance, which means you control two of the largest cost variables).
Under CIF, the seller (us) handles everything FOB covers, plus:
The buyer still handles destination port charges, customs clearance, and inland delivery.
Why first-time importers often prefer CIF: we know the freight forwarders, we have the insurance relationships, and a CIF quote is one number you can compare against a landed budget. You don't have to separately solicit ocean freight quotes and insurance quotes and try to synchronize them.
Why experienced importers often prefer FOB: ocean freight pricing moves. When we quote CIF to a destination, we build in a freight-rate buffer. If you have your own freight forwarder relationship, you'll often get better freight pricing than we built into the CIF quote.
Under DDP, the seller handles everything — FOB plus CIF plus import customs, duties, taxes, and delivery to the buyer's named location.
In practice, we offer DDP only to specific markets where we have established logistics and customs partners who can handle the destination-side work reliably. DDP requires the seller to pay import duties and VAT, which means we need confidence that the duty calculation is correct, the customs process is predictable, and there's an on-the-ground partner to handle the physical delivery.
We'll quote DDP for specific destinations on request. Usually that list includes markets where we've shipped multiple previous orders and have documented a reliable customs process.
EXW (Ex Works). Buyer picks up at the seller's factory. Very cheap on paper. A nightmare in practice — the buyer has to coordinate Chinese export customs, Chinese inland freight to port, and everything else. We don't quote EXW for most buyers; almost nobody actually wants it.
CFR (Cost and Freight). Like CIF but without insurance. Occasionally quoted for buyers who have an open marine insurance policy covering their cargo.
DAP (Delivered At Place). Like DDP but without duties. Buyer still handles customs.
Practical guidance by importer profile:
First-time importer, learning the mechanics: CIF. One number you can budget against. Don't chase the small FOB savings on your first shipment — it's not worth the coordination complexity.
Experienced importer with established freight forwarder: FOB. You'll control shipping cost and timing.
Buyer who just wants the car delivered, no hassle: DDP, if available to your market. Confirm specifically that DDP pricing is fixed — not "DDP subject to customs valuation" which leaves you exposed if the duty calculation changes.
Large-fleet buyer: Usually FOB or sometimes FAS (Free Alongside Ship). At fleet scale, ocean freight negotiation is worth doing directly. You may have better shipping rates than we'd build into CIF.
Mixing Incoterm with unrelated costs. "CIF Lagos $18,000" doesn't tell you what's covered. Is that per unit? Does it include marine insurance? Pre-shipment inspection? A proper quote is: "CIF Lagos, per unit, 1 unit minimum, including pre-shipment inspection, excluding destination port charges and import duties."
Thinking DDP includes everything. DDP includes import duties but typically doesn't include optional customs processes specific to your country — for example, some markets require import permits or pre-arrival certifications. DDP often excludes these. Confirm.
Skipping marine insurance in a CFR quote. If you're buying CFR, you need your own insurance policy covering the cargo. Self-insuring on $15,000+ of vehicle on an ocean transit is not a good plan.
For most buyers, we'll quote FOB by default with CIF available on request. Once you've told us the destination, we can quote both. DDP we confirm per specific market.
See our pricing and terms page for the full commercial framework.
CIF is typically FOB plus ocean freight (varies by destination, typically $800-$3,000 per vehicle) plus marine insurance (~0.5-1% of cargo value). For a $15,000 FOB vehicle shipping to Dubai, CIF might be $16,500-$17,000.
No — DDP is available for markets where we have established customs and logistics partners. Typically this includes major ports in the GCC, parts of Southeast Asia, and several Latin American markets. Confirm destination with us before assuming DDP is available.
CIF, usually. It's one number to budget against. You handle customs and onward delivery at the destination, but the ocean-transit portion is coordinated by us. Once you've completed one or two shipments, switching to FOB and controlling your own freight becomes easier.
Send an RFQ via WhatsApp or email. Our Shanghai export desk will scope your requirements and return a qualified FOB / CIF / DDP quotation — typically within one Shanghai business day.