Incoterms 2020 for Importers: EXW, FOB, CIF, DDP in Plain English

Your supplier sends a quote: "FOB Shenzhen, $4.20 per unit." How much is that, really? What will the goods cost at your warehouse in Ukraine — with freight, insurance, import duty, and VAT? Without understanding Incoterms, there is no way to answer: the same "unit price" under EXW, FOB, and DDP means three different amounts, differing by tens of percent. In this guide, AgilFreight explains the four terms an importer from China actually encounters, and shows how to avoid comparing apples to oranges.

What Incoterms are and why they matter

Incoterms 2020 are international rules that divide three things between seller and buyer: costs, responsibility for arranging transport, and the point where risk transfers. One three-letter abbreviation on an invoice answers the questions "who pays for freight," "who handles export clearance," and "from what moment is cargo damage my problem."

For an importer, Incoterms are above all a price-comparison tool. A "$5 EXW" offer from one factory can be more expensive than "$5.80 FOB" from another, because in the first case you pay separately for delivery to the port and export clearance. Prices can only be compared once brought to the same delivery terms.

EXW: the lowest price, the most hassle

EXW (Ex Works) means "pick up at the factory." The seller's only obligation is to have the goods ready for collection at their warehouse. Everything else is on you: collecting the cargo, hauling it to the port, handling Chinese export clearance, booking the vessel or flight, insuring, and clearing customs in Ukraine.

The EXW price is always the lowest, which is exactly why it is popular in price lists: it looks attractive. But for a newcomer, EXW is a trap: arranging pickup from a factory deep in a province and export clearance in China without a local agent is practically impossible. EXW makes sense when you have a freight forwarder with its own infrastructure in China — then you control every link and genuinely save.

FOB: the classic of sea freight

FOB (Free On Board) means the seller, at their own expense, delivers the goods to the port of shipment, clears Chinese customs, and loads them onto the vessel. From the moment the cargo is on board, costs and risks pass to you: freight, insurance, unloading, delivery to your door, customs clearance.

FOB is the most balanced term for regular importing: the Chinese leg of the logistics is handled by the party who knows it best (the supplier), while you control the international freight — choosing the carrier, the rate, and the route. FOB is also the easiest basis on which to compare factory quotes against each other.

CIF: convenient, but check the freight

CIF (Cost, Insurance and Freight) means the seller pays not only for delivery to the port and loading, but also for sea freight to the destination port plus minimal insurance. It sounds convenient: one price, and the cargo is already sailing your way.

The catch is that the freight in a CIF price is set by the supplier, and rarely at the best rate. A common practice is a lowballed freight rate in the price, compensated by inflated local charges at the destination port (destination charges): for unloading, documents, releasing the bill of lading. As a result, the "attractive CIF" ends up more expensive than FOB with your own freight. If you do agree to CIF, request a complete written list of destination-port charges in advance.

DAP and DDP: door-to-door delivery

DAP (Delivered at Place) means the seller delivers the cargo to an agreed location in Ukraine, but import customs clearance and payments are on you. DDP (Delivered Duty Paid) is the maximum term: the seller delivers the goods with customs payments already settled, and you simply receive the cargo.

In practice, the "all-inclusive to the door" model is exactly how consolidated cargo shipping works: you pay a single rate per kilogram or cubic meter, and the carrier takes care of consolidation, freight, the border, and delivery within Ukraine. For small lots this is the simplest entry into importing — no contract or accreditation of your own required. At AgilFreight, this format is delivered through LCL/consolidated cargo, and for clients without foreign trade registration we offer importing under our own contract for 2–4% of the goods' value — with official documents for your accounting.

Comparison table

Who pays for what at each stage of the route:

Risk passes to the buyer: under EXW — at the factory warehouse; under FOB and CIF — at the port of shipment (under CIF the seller pays the freight, but the in-transit risk is already yours — which is why insurance matters); under DDP — at the destination.

AgilFreight tip: never compare one factory's EXW price head-to-head with another's FOB price. Bring both to the cost at your own warehouse: add local costs in China, freight, import duty, and 20% VAT — and only then choose your supplier.

Which term to choose

There is no universal answer — but there are typical scenarios:

1. First shipment, testing a niche, a few cubic meters at most — take the cargo/DDP format via consolidated shipping. One rate, minimal risk, a fast start: air in 7–12 days from $5.9/kg, or road in 15–22 days from $3.4/kg.
2. Regular deliveries, a growing business — move to FOB with your own freight and full customs clearance. That means control over the rate, official imports with VAT credited against your tax liability, and independence from the supplier's carrier.
3. Large volumes, full containers — FOB or EXW with a forwarder in China: at scale, every link you control yields savings. Sea from $235/m³, 35–50 days.
4. The supplier insists on CIF — agree only after written confirmation of the destination-port charges.

Our Incoterms guide will help you work out which term is best for your product and volume, and the shipping calculator will price the full delivery cost across different routes. If you need a live consultation, the AgilFreight team will design a supply scheme for your case.