Incoterms shipping: Incoterms® 2020 guide for international freight
Incoterms shipping rules define who pays, who manages, and when risk transfers in international deliveries. With Ianotrade you set Incoterm + place of delivery + documentation flow clearly, reducing unexpected costs and delays.
- FCL containers, LCL, air freight, road freight
- Incoterm + place: reduces contract ambiguity
- Documents & minimum data checklist
- Focus on real costs (terminal, handling, storage)
Tip: always write INCOTERM + PLACE (e.g., DAP Milan – Incoterms® 2020).
Fewer surprises
Reduce unexpected charges (terminal, handling, storage) and delivery disputes.
Clear operational flow
Incoterm + place + documents: aligned from the quote to the shipment.
Faster clearance
Correct data and documents help prevent customs delays.
What Incoterms® are and why they impact costs and risk
Incoterms® are standard trade rules defining responsibilities, cost allocation, and risk transfer between seller and buyer. They clarify who arranges transport, who handles export/import formalities, and what is included in the quoted price.
Quick table: EXW, FOB, CIF, DAP, DDP
Below are the most common terms in import/export operations. The table is designed for practical use: what is included, who pays, and when each term is typically recommended. For “turnkey” scenarios, see DDP delivery for resellers.
| Incoterm | Who pays transport | Export | Import duties/VAT | Best for | Note |
|---|---|---|---|---|---|
| EXW | Buyer | Buyer | Buyer | Full control if you have a strong forwarder setup. | Watch out for extra charges if pickup/export aren’t managed properly. |
| FOB | Buyer (main carriage) | Seller | Buyer | Great for ocean freight (containers): buyer controls ocean freight choices. | Always specify the port of loading (e.g., FOB Ningbo). |
| CIF | Seller (ocean to port of arrival) | Seller | Buyer | Useful for comparing “to port of arrival” prices. | Usually does not include inland delivery to your warehouse. |
| DAP | Seller (to the named place) | Seller | Buyer | Delivery to destination not cleared. | Buyer handles import clearance and local charges. |
| DDP | Seller | Seller | Seller | Turnkey where applicable and agreed. | Clarify inclusions: duties/VAT, local fees, last mile, delivery constraints. |
Best practice: always write Incoterm + place (e.g., DAP Milan – Incoterms® 2020) to clearly define the delivery point and responsibilities.
How to choose the right Incoterm (Ianotrade method)
We recommend the right Incoterm based on real shipment data and on your internal setup (customs handling, forwarder structure, lead times, delivery constraints).
1) Product & packaging data
Quantities, cartons, weight, dimensions, CBM, fragility, palletization.
2) Route & lead times
Origin, real destination address (ZIP), delivery window, mode (FCL/LCL/air/road).
3) Customs & compliance
HS code (if available), required documents, labeling, EU/UK requirements.
Common mistakes that increase costs and delays
Choosing EXW “to save money”
Often creates extra charges if pickup/export/terminal handling is not managed properly.
Using FOB without naming the port
“FOB” alone is incomplete: you must specify the port (e.g., FOB Shanghai/Ningbo).
Assuming CIF means delivery to your warehouse
CIF typically ends at the port of arrival; inland delivery and import clearance are separate.
Using DDP without defining inclusions
Be explicit about duties/VAT, local fees, last mile delivery, unloading constraints, and timelines.
Inconsistent data across documents
Mismatched packing list / invoice / cartons / weights increases the risk of delays and extra costs.
Documents & data needed for accurate shipping quotes
Reliable quotes require precise minimum data. You can send everything via RFQ.
Minimum data
Product + photo/link, quantity, cartons/weight/CBM, origin, destination (ZIP), required lead time, goods value.
Typical documents
Commercial Invoice, Packing List, Bill of Lading / AWB, possible Certificate of Origin and technical declarations.
Practical tip
If you already have a preferred term, specify it upfront (FOB / DAP / DDP) and always name the place.
Incoterms FAQ
What is the difference between DAP and DDP?
DAP means delivery to destination not cleared for import. DDP means delivery cleared (where applicable and agreed), with clear inclusions.
FOB or EXW: what’s better for a container shipment?
In many cases FOB is cleaner for ocean freight: the seller handles export at origin and the buyer controls the main carriage.
Does CIF include delivery to my warehouse?
Usually not. CIF includes cost, insurance and freight to the port of arrival. Inland delivery and import clearance are separate unless agreed.
Do Incoterms include duties and VAT?
Generally no. Duties and VAT are paid by the importer. With DDP, they can be included if agreed and applicable.
What data do you need for an accurate shipping quote?
Product description, quantity, cartons/weight/CBM, origin, destination ZIP, goods value and desired Incoterm. HS code if available.
Need the right Incoterm and a clear shipping setup?
Send product, quantity, origin and destination: we’ll reply with a recommended term and a clear operational flow.