Accepting CIF because freight is included
Your supplier picked the carrier and the forwarder. Their destination agent bills you whatever they decide, and you have no leverage. The freight you "saved" comes back as arrival charges you didn't budget.
Guide · Buyer's side
Incoterms for importers.
All eleven Incoterms 2020 rules from the buyer's side: what you're actually paying for under each, where your risk begins, and which ones to push back on.
Short answer
Incoterms are eleven standard rules published by the International Chamber of Commerce that define who pays for what, and where risk passes, in an international sale. For most importers the best term is FOB on ocean shipments and FCA on air or truck. Both put your supplier in charge of export clearance at origin, and put you in charge of the freight and the U.S. side — where you can actually control cost.
Push back on CIF and DDP. Under both, your supplier chooses the forwarder, and you inherit destination charges you have no leverage over.
Incoterms 2020 · Reviewed 7 August 2026 · Imports Exports Logistics, Inc.
The rules
What each term costs you as the buyer.
Your supplier quotes a term alongside the price, and it decides how much of the journey you're paying for. The same unit price under two different terms is two different deals.
| Term | Name | You pay | Your risk starts | Export clearance |
|---|---|---|---|---|
| EXW | Ex WorksAny mode | Everything from the supplier's dock onwards | At the supplier's premises | You |
| Cheapest unit price because it covers the least. You're now responsible for export formalities in a country you're not in. Push for FCA instead — it costs the supplier almost nothing and removes a real risk from you. | ||||
| FCA | Free CarrierAny mode | From the named place onwards | When collected, or at the named place | Supplier |
| The best term to ask for when EXW is offered. Supplier clears export, you control the freight. Under Incoterms 2020 you can request an on-board bill of lading, which your bank may need. | ||||
| FAS | Free Alongside ShipSea only | Loading, ocean freight, and everything after | Alongside the vessel at origin | Supplier |
| Mostly bulk cargo. If you're buying containers and see FAS, ask why. | ||||
| FOB | Free On BoardSea only | From the vessel onwards | When goods are on board at origin | Supplier |
| Usually the best term for an importer. You gain control of the carrier, the rate and the destination side without inheriting foreign paperwork. | ||||
| CFR | Cost and FreightSea only | Clearance and delivery at your end | On board at origin — you carry the risk while the supplier's carrier moves it | Supplier |
| Freight is in the price, but the supplier picked the carrier. You'll inherit their agent's destination charges with no leverage over them. | ||||
| CIF | Cost, Insurance & FreightSea only | Clearance and delivery at your end | On board at origin | Supplier |
| Looks convenient. The most common source of surprise arrival fees. Insurance is minimum cover only — check what's actually insured before you rely on it. | ||||
| CPT | Carriage Paid ToAny mode | Clearance and delivery at destination | When the supplier hands to the first carrier — very early | Supplier |
| You carry risk for most of the journey while the supplier controls the routing. Insure it yourself. | ||||
| CIP | Carriage and Insurance Paid ToAny mode | Clearance and delivery at destination | At the first carrier | Supplier |
| Since 2020 the supplier must buy all-risks cover, which is a genuine improvement over CIF. Ask for the certificate. | ||||
| DAP | Delivered At PlaceAny mode | Import clearance, duty, and unloading | On arrival at your site | Supplier |
| Good balance. The supplier handles the freight, you keep control of clearance and your own broker. | ||||
| DPU | Delivered at Place UnloadedAny mode | Import clearance and duty only | After unloading at your site | Supplier |
| Useful when you don't have unloading equipment. Confirm the supplier understands what unloading at your site actually requires. | ||||
| DDP | Delivered Duty PaidAny mode | Nothing extra — in theory | At your door | Supplier (both ends) |
| Simplest to buy, but you're paying a marked-up price for logistics you can't audit. And you generally remain liable to CBP for the accuracy of the entry regardless of who filed it. Convenience, not protection. | ||||
⚓ sea and inland waterway onlyAll others work for any mode, including air and truck
Three traps
Where importers lose the margin they thought they had.
01
02
Taking EXW to get the lowest price
You've just made yourself responsible for export formalities in a country you have no presence in. The quote is lower because it covers less. Ask for FCA — it costs your supplier almost nothing.
03
Assuming DDP means no liability
Your supplier pays the duty, but you generally remain liable to CBP for the accuracy of the entry. DDP buys you convenience, not protection — and you're paying a marked-up price for logistics you can't audit.
In short
If you only remember one thing.
Ask for FOB on ocean, or FCA on air and truck. Both put your supplier in charge of getting the goods cleared and loaded at origin — which they're equipped to do — and put you in charge of the freight and the U.S. side, where you can actually control cost.
If a supplier insists on CIF or DDP, that's usually a sign the logistics margin matters to them. Ask what the destination charges will be, in writing, before you agree the price.
Common questions
Importer questions, answered.
Which Incoterm is best for an importer?
FOB on ocean shipments and FCA on air or truck. Both put the supplier in charge of export clearance and loading at origin — which they're equipped to do — and put you in charge of the main carriage and the destination side, where you can actually control cost.
Why is CIF a problem?
Your supplier chooses the carrier and the forwarder, so you inherit whatever destination charges their agent decides to bill, with no leverage over them. CIF is the most common source of unexpected arrival charges. The insurance is also minimum cover only, under Institute Cargo Clauses C.
Should I accept EXW to get a lower price?
Usually not. EXW is cheaper because it covers less — you become responsible for export formalities in a country where you have no presence. Asking for FCA instead costs your supplier very little and removes that exposure entirely.
Does DDP remove my customs liability?
No. Your supplier pays the freight, clearance and duty, but as importer of record you generally remain liable to CBP for the accuracy of the entry and the correctness of the classification. DDP buys convenience, not protection.
What does the U.S. side actually cost?
Customs entry is $175, ISF filing $65, a single-entry bond starts at $95, and handling and documentation is $150 — from $485 for a standard import, whatever the shipment size. See the full rate card →
Send us the term your supplier quoted.
We'll tell you what it means for your landed cost, whether it's in your interest, and what to ask for instead.
General guidance, not legal advice. Your purchase contract governs.