| Permitted transport mode |
Sea or inland waterway transport only |
Sea or inland waterway transport only |
Any mode of transport, including multimodal delivery |
| Named place in the quotation |
Named port of shipment, for example, “FOB Shanghai Port” |
Named port of destination, for example, “CIF Los Angeles Port” |
Named place of destination, for example, “DDP Buyer’s Site, California” |
| Seller’s main obligations |
Manufacture, pack, export-clear, transport to the port, and load the goods on board the vessel |
All FOB obligations, plus contract ocean freight and cargo insurance to the named destination port |
Deliver to the named destination, complete export and import clearance, and pay applicable duties and import taxes |
| When risk transfers to the buyer |
When the goods are loaded on board the vessel at the shipment port |
When the goods are loaded on board the vessel at the shipment port, even though the seller pays freight and insurance |
When the goods are placed at the buyer’s disposal at the named destination, ready for unloading |
| Main carriage |
Arranged and paid by the buyer |
Arranged and paid by the seller |
Arranged and paid by the seller |
| Insurance responsibility |
Buyer arranges insurance if required |
Seller must obtain the minimum insurance cover required by CIF under Incoterms® 2020; buyer may request broader cover |
Seller bears delivery risk and should arrange suitable insurance; Incoterms® 2020 does not prescribe a specific insurance level for DDP |
| Export clearance in China |
Seller |
Seller |
Seller |
| Import clearance and duties |
Buyer |
Buyer |
Seller, subject to the seller being legally able to act as importer in the destination country |
| Unloading at the final site |
Buyer |
Buyer |
Buyer, unless unloading is expressly included in the sales contract |
| Buyer’s control over shipping |
High; buyer chooses the carrier, route, and freight terms |
Medium; seller selects and pays for the main carriage, subject to the sales contract |
Low; seller controls most logistics until delivery |
| Best suited for |
Experienced importers with freight-forwarding and customs capabilities |
Buyers wanting the seller to arrange ocean freight but willing to manage import procedures |
Buyers seeking one delivered price and able to confirm local tax and importer-of-record requirements |
| Typical risk for a prefab-house buyer |
Unexpected freight, port, customs, duty, tax, and inland-delivery costs |
Destination charges, customs valuation, duties, taxes, and inland transport may remain outside the quote |
The quote may exclude unloading, permits, foundations, assembly, utility connections, or local code work unless stated clearly |
| Recommended contract wording |
“FOB [exact port], Incoterms® 2020” |
“CIF [exact destination port], Incoterms® 2020” |
“DDP [full site address], Incoterms® 2020,” with taxes, unloading, permits, and installation listed separately |
|
Illustrative Cost Comparison for One Prefab House Shipment
|
| Planning assumptions |
Product value: US$48,000; ocean freight: US$4,200; cargo insurance: US$650; destination charges: US$1,800; import duty assumption: 5% of the customs value; inland delivery: US$1,200. Import VAT/GST, permits, installation, foundation, and local construction work are excluded.
|
| Quoted amount before destination costs |
US$48,000 |
US$52,850
48,000 + 4,200 + 650 |
Illustrative delivered quote: US$60,200 |
| Estimated customs value |
US$52,850
Product + freight + insurance |
US$52,850 |
Confirm with the destination customs authority; the seller’s DDP calculation must state the valuation basis |
| Illustrative import duty at 5% |
US$2,642.50 |
US$2,642.50 |
Included only if expressly confirmed in the DDP quote |
| Estimated landed cost before import VAT/GST |
US$58,492.50 |
US$58,492.50 |
US$60,200, subject to the quote’s inclusions and local tax rules |
| Cost items still requiring written confirmation |
Port handling, ocean freight, insurance, destination charges, customs broker, duty, import taxes, inland transport, unloading, permits, and installation |
Destination charges, customs broker, duty, import taxes, inland transport, unloading, permits, and installation |
Importer-of-record status, tax treatment, unloading, permits, site access, foundation, assembly, and local compliance work |
| Practical buying recommendation |
Choose FOB when you have a reliable freight forwarder and want maximum control over international shipping. |
Choose CIF when you want the seller to arrange sea freight, but compare all destination and import charges separately. |
Choose DDP only after verifying that the seller can legally manage import clearance and that every tax, delivery, unloading, and project-service item is listed. |
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