Incoterms, in ten minutes
Incoterms are three-letter rules published by the International Chamber of Commerce that define where the seller’s responsibility ends and the buyer’s begins. They control cost, risk, and insurance — not ownership of the goods.
| Risk transfer | EXW | FOB | CIF |
|---|---|---|---|
| Risk transfers at | Factory gate | On vessel (load port) | On vessel (load port) |
| Pays main freight | Buyer | Buyer | Seller |
| Arranges insurance | Buyer | Buyer | Seller |
| Buyer control | Low | High | Medium |
| Best for | You have China logistics | Most Alibaba buyers | Want all-in price |
How to pick one
Negotiate FOB for most shipments so you keep control of ocean freight and the forwarder. Use EXW only if you have a reliable Chinese logistics partner; avoid CIF when you want transparency on the freight rate. Once you have chosen FOB, compare modes in Sea vs. air, and if you buy from several suppliers read consolidation basics.
If your supplier quotes EXW but you want FOB, ask: “Can you quote FOB [nearest port] instead?” — the seller adds inland trucking and export clearance to the price, and you gain visibility on who handles the freight.