When you receive a quote from a Chinese supplier, you will always see a three-letter abbreviation next to the price: FOB Ningbo, CIF Mersin, EXW Foshan and so on. These abbreviations are not a mere detail; they determine where the goods are delivered, who pays freight and insurance, when risk passes to the buyer and who handles export formalities. Choosing the wrong delivery term can make a cheap-looking offer expensive later with unexpected costs. In this guide we explain in plain language the delivery terms most often used in imports from China, above all FOB, CIF and EXW, within the framework of the Incoterms 2020 rules. You will learn the advantages and pitfalls of each, how to compare quotes correctly and how to choose the most suitable term for you.
What are delivery terms (Incoterms) and why do they matter?
Incoterms are rules published by the International Chamber of Commerce (ICC) that standardise the division of tasks, costs and risks between buyer and seller in international sales. The current set is Incoterms 2020. Thanks to these rules, a factory in China and an importer in Turkey understand the same thing from a single abbreviation without long explanations. The contract should always state the place name and rule set alongside the term, for example “FOB Ningbo, Incoterms 2020”.
Because the delivery term determines what the price covers, it is the basis of quote comparison. Comparing an EXW price directly with a CIF price means that one includes freight and insurance while in the other everything from the factory gate onwards is yours. The delivery term also determines who makes an insurance claim and who bears the loss if something goes wrong, for example if goods are damaged in transit.
What is EXW? Ex Works delivery and its practical challenges in China
EXW (Ex Works) is the delivery term under which the seller takes on the least responsibility. The seller makes the goods available to the buyer at its own premises; loading, inland transport, export customs formalities, freight, insurance and everything in the destination country are the buyer’s. On paper the EXW price is the lowest, but it is only part of the total cost.
In China, EXW has an important practical challenge: the export customs declaration must be made by a company registered in China with export rights. Since a foreign buyer cannot do this directly, either the forwarder must offer this service or the supplier must provide the export documents. So even if you agree on EXW, it is advisable to clarify in writing who will make the export declaration, or otherwise to prefer a more suitable term such as FCA.
What is FOB? The most common delivery term in imports from China
FOB (Free On Board) is the most common delivery term in sea imports from China. The seller loads the goods onto the vessel nominated by the buyer at the named Chinese port; transport from factory to port, export customs formalities and loading costs at the port are the seller’s. Risk passes to the buyer once the goods are on board; ocean freight, insurance and all procedures at the destination port are the buyer’s responsibility.
FOB’s biggest advantage for the importer is that you choose the freight and the forwarder. You therefore control the freight rate, transit time and destination port charges and get a transparent cost structure. At the same time, the export process within China stays with the supplier, who does this every day. This balance makes FOB the most practical option, especially for companies that import regularly.
A point to watch with FOB is that it is designed only for sea and inland waterway transport. In container shipping, goods are often handed over at the container terminal before being loaded on board, so from an Incoterms perspective FCA may be the more accurate term. Although FOB remains widely used in practice, it is helpful to clarify in the contract when risk passes.
What is CIF? Pros and cons of delivery with freight and insurance included
CIF (Cost, Insurance and Freight) is the term under which the seller, besides loading the goods on board at the Chinese port, also pays ocean freight to the destination port and minimum-cover insurance. In a “CIF Mersin” quote, for example, the price covers carriage of the goods to the port of Mersin. There is one important detail, however: as with FOB, risk passes to the buyer when the goods are loaded on board in China.
CIF offers convenience for first-time importers because you do not deal with arranging freight. On the other hand, you have less control over freight rates and vessel choice, and you may face unexpected local charges at the destination port. The insurance arranged by the seller is also usually minimum cover; if you want broader cover, you need to state it clearly in the contract or take out additional insurance.
If you work on CIF, finding out in advance which items will be payable at the destination port is the most important step. Items such as terminal handling charges, bill of lading release fees and demurrage or detention charges depending on how long the container stays at the port or with you vary according to the carrier and agent the seller chooses. Getting this information from the agent in Turkey or your customs broker before ordering lets you see the real cost of a CIF quote and avoids surprises.
FCA, CFR, DAP and DDP: other delivery terms you should know
FCA (Free Carrier) is a flexible term under which the seller, having cleared the goods for export, delivers them to the carrier nominated by the buyer, for example the forwarder’s warehouse or the container terminal; it can be used for any mode of transport. CFR is similar to CIF but excludes insurance. Under DAP the seller brings the goods to the destination, while import clearance and duties are the buyer’s. Under DDP the seller takes on everything, including import duties.
Although DDP sounds like the most comfortable option, it should be assessed carefully for imports into Turkey. Making the import declaration correctly, calculating duties correctly and ensuring document compliance in Turkey directly affect your business; having these processes managed by a seller abroad may reduce transparency. For customs procedures and duties, we always recommend working with your own customs broker.
- EXW: delivery at the factory, almost everything on the buyer
- FCA: delivery to the carrier, cleared for export
- FOB: delivery on board at the Chinese port
- CFR / CIF: freight (and insurance for CIF) paid by seller, risk passes in China
- DAP / DDP: delivery at destination
FOB, CIF or EXW? Comparing quotes correctly
The only sound way to compare quotes with different delivery terms is to convert them all to the same point, preferably the total cost until the goods reach your warehouse in Turkey. To do this, add inland transport to the port and export formalities to the EXW quote, ocean freight and insurance to the FOB quote, and local destination port charges to the CIF quote. The duties determined by your customs broker, inland delivery and storage are then accounted for in the same way for all quotes.
How customs value is calculated, that is, how freight and insurance are included in the tax base, is determined by legislation regardless of the delivery term. So instead of assumptions like “I bought CIF, so the duty will be lower”, leave the calculation to your customs broker. A simple comparison sheet built with current freight and local charge figures from your forwarder will let you make the right decision.
Choosing the right delivery term for imports from China, with Yeni İpekyolu
To draw a general framework: for companies that import regularly by sea and work with their own forwarder, FOB or FCA is often the most balanced choice. Small buyers importing for the first time who do not want to deal with freight can start with CIF or CFR, but should ask about destination charges in advance. For buyers collecting products from several factories and consolidating in China, EXW or FCA with delivery to their own warehouse can make sense.
At Yeni İpekyolu we help you compare supplier quotes by delivery term, define the term and place name correctly in the contract, coordinate transport and export within China and manage communication with your forwarder. Send us your quote and let us work out your total cost sheet together and identify the most suitable delivery term for you.
Frequently asked questions
What is the main difference between FOB and CIF?
Under FOB the buyer arranges and pays freight and insurance; under CIF the seller pays them up to the destination port. In both, risk passes to the buyer when the goods are loaded on board in China.
Can FOB be used for air freight?
Under the Incoterms rules FOB is only for sea and inland waterway transport. FCA is the more accurate choice for air freight, although “FOB airport” is sometimes seen in the market; if so, clarify its meaning in writing.
Does the delivery term change the customs duty?
The method of calculating customs value is set by legislation. We recommend confirming with your customs broker how the delivery term will be reflected in the duty calculation.
How should I write the delivery term in the contract?
Write the abbreviation together with as precise a place name as possible and the rule set, for example “FOB Ningbo, Incoterms 2020” or “FCA Yiwu, forwarder’s warehouse, Incoterms 2020”.
Who is responsible if goods are damaged in transit?
It depends on where risk passes. Under FOB and CIF risk passes to the buyer upon loading in China, so damage at sea is the buyer’s risk; that is why adequate insurance cover is important.
Does a supplier quote only one delivery term?
No. Most suppliers can quote the same product under different terms such as EXW, FOB and CIF if you ask. Requesting more than one term at the first quote stage is useful for comparison.