The most comprehensive guide to the 8 major international trade terms: EXW, FOB, CFR, CIF, FCA, DAP, DDP, DDU
Actually, there's no need to overcomplicate it—they are simply internationally accepted standards for delivery, transportation, and settlement methods.
Today, in the most accessible way possible, we'll help you understand all 8 commonly used trade terms in one go. Suitable for foreign trade professionals, cross-border sellers, and logistics practitioners to reference and learn from. Useful for daily quotations, order taking, and shipping
EXW
EXW is the most hassle-free delivery model for sellers
The seller only needs to have the goods ready at their factory or agreed warehouse and complete the delivery
After the goods leave the factory, pickup, loading, export customs declaration, international transportation, destination port customs clearance, taxes, and final delivery are all arranged and borne by the buyer
This term is suitable for transactions where the buyer has a complete independent logistics system and full control over the shipping process
FOB
FOB is only applicable to sea freight and inland waterway shipping
The seller is responsible for transporting the goods to the domestic port, completing export customs clearance, and loading them onto the designated vessel.
Once the goods are loaded and shipped, all subsequent processes including ocean shipping, destination port customs clearance, and delivery are the buyer's responsibility.
FOB is the most commonly used sea freight mode in traditional foreign trade.
CFR
CFR 运输方式仅限海运、内河运输
卖方负责出口报关、国内段操作、货物装船,并承担至目的港的主干海运运费
需重点区分:该条款仅包干运费,不包含海运保险。货物装船后,海上运输风险、货损风险、投保义务、目的港清关税费,均由买方承担
CIF
CIF is also exclusively for sea freight scenarios and is very similar to CFR.
The seller covers customs clearance and ocean freight, and additionally purchases a marine insurance policy.
It is a more comprehensive delivery method in sea freight, suitable for general cargo foreign trade orders
It should be noted that: the seller purchasing insurance and paying freight does not mean bearing the risks throughout the entire process. After the goods are loaded on board, transportation risks, cargo damage liability, destination port compliance, and taxes are still borne by the buyer
FCA
FCA is the officially recommended term under Incoterms® 2020, suitable for all modes of transport including sea, air, rail, express, and multimodal. It is currently the delivery term with the highest compliance and stability.
The seller completes formal export customs clearance and delivers the goods to the logistics carrier designated by the buyer, thereby fulfilling the delivery obligation.
After the goods are handed over to the carrier, all transport risks, transit risks, overseas customs clearance, and tax liabilities are fully transferred to the buyer.
DAP
The core definition of DAP is: covering the entire transport journey, excluding import duties and taxes.
The seller is responsible for export customs clearance and the entire international transport, delivering the goods to the overseas destination designated by the buyer. The seller bears all transport risks until the goods arrive at the destination.
Import customs clearance in the destination country, import tariffs, VAT, and all local miscellaneous charges are the buyer's responsibility to handle and pay.
DDP
DDP is what people commonly refer to as double clearance, tax-inclusive, door-to-door delivery.
The seller is responsible for the entire process: export, sea/air freight, destination country customs clearance, tax payment, and last-mile delivery.
The buyer only needs to receive the goods. It is currently the most commonly used shipping method for cross-border e-commerce and FBA.
DDU
DDU is an old version of Incoterms terminology that has been officially abolished in the 2020 new rules and is no longer used as a standard trade term.
Its original rights and responsibilities are completely identical to the current DAP: the seller is responsible for the entire transport to the destination, and the buyer bears import customs clearance and taxes.
For all newly signed contracts and new orders, it is uniformly recommended to use DAP instead of DDU to avoid rule ambiguity.
Actually, trade terms are not complicated. They are just used to unify the delivery standards between buyers and sellers. Once you understand these 8 terms, you will basically no longer get confused when taking orders, quoting prices, and shipping goods in daily work.