Getting Incoterms right saves 3–7% on landed cost and eliminates 90% of shipping disputes. This is the buyer-friendly cheat sheet.
Most common for first orders
CIF
supplier arranges freight+insurance
Best for volume buyers
FOB
you control freight
Convenience premium (DDP)
+5–8%
vs CIF
The seven Incoterms you need to know
| Term | Risk transfers at | Buyer covers |
|---|---|---|
| EXW | Factory gate | everything after |
| FCA | Named carrier / port | ocean freight + insurance + import |
| FOB | Ship's rail at origin port | ocean freight + insurance + import |
| CFR | Ship's rail at origin port | insurance + import |
| CIF | Ship's rail at origin port | import duties + inland transport |
| CIP | Named place at destination | import duties + inland (all modes) |
| DAP | Named place at destination | import duties + unloading |
| DDP | Buyer's warehouse | nothing (supplier does it all) |
Under CIF, risk transfers to you at origin port even though the supplier arranges freight. If a container is lost at sea, you claim on insurance — not the supplier. Always verify the marine cargo insurance policy is in your name or endorsed to you.
Frequently asked questions
QWhich Incoterm should I use for my first China order?
CIF. Simple, supplier absorbs freight logistics, and any freight problems are the supplier's to solve. Switch to FOB once you have your own freight forwarder relationship.
Post your specification on Chinese.Solar and our AI matches you to 3–5 verified tier-1 manufacturers in under 60 seconds — with live CIF pricing, factory audits and export track records.