You have a price from a Quanzhou bag factory, but the quote ends with “FOB Xiamen” or “EXW Fujian” — and the letters decide who books the ship, who carries the risk on the high seas, who clears import, and who pays if a container is damaged or a tariff spikes. Incoterms are the international shorthand for exactly that division of risk and cost between buyer and seller. Owned and published by the ICC (International Chamber of Commerce), the current edition is Incoterms 2020 (which entered into force January 1, 2020), and it defines 11 rules: 7 for any mode of transport and 4 for sea/inland-waterway only. This guide explains each term’s risk-and-cost transfer in plain terms, what changed in 2020, and how a bag importer chooses the right one.
Quick Answer / TL;DR
The 11 Incoterms 2020 rules split into two families. For any mode: EXW, FCA, CPT, CIP, DAP, DPU, DDP. For sea/inland-waterway only: FAS, FOB, CFR, CIF. For a bag importer buying from China the realistic shortlist is: FOB (most common — seller loads the vessel, you take over for freight, insurance, import), EXW (you do everything from the factory door), CIF (seller pays freight+insurance to the destination port, but risk shifts to you on board), DAP (delivered to your door, unfree of import duty), and DDP (delivered duty-paid, the most hands-off). Always state the edition in your contract — e.g., “FOB Xiamen, Incoterms 2020” — because who holds risk and cost turns on those exact letters.
The 11 Rules at a Glance (Source: ICC Incoterms 2020)
Here is the one-line purpose of each rule, grouped the way the ICC groups them:
| Rule | Mode | Risk transfers to buyer | Seller’s core obligation |
|---|---|---|---|
| EXW Ex Works | Any | At seller’s premises | Make goods available; nothing else |
| FCA Free Carrier | Any | When handed to carrier at named place | Deliver to carrier, cleared for export |
| CPT Carriage Paid To | Any | When handed to first carrier | Pays carriage to named destination |
| CIP Carriage & Insurance Paid To | Any | When handed to first carrier | Pays carriage + insurance |
| DAP Delivered At Place | Any | At named destination (not unloaded) | Pays to deliver, ready for unloading |
| DPU Delivered At Place Unloaded | Any | At named place, after unloading | Pays to deliver AND unload |
| DDP Delivered Duty Paid | Any | At named destination, duty and taxes paid | Pays delivery + import duty + taxes |
| FAS Free Alongside Ship | Sea/inland | When placed alongside the vessel | Place alongside vessel (export cleared) |
| FOB Free On Board | Sea/inland | When loaded on board the vessel | Load on board (export cleared) |
| CFR Cost & Freight | Sea/inland | On board the vessel | Pays freight to destination port |
| CIF Cost, Insurance & Freight | Sea/inland | On board the vessel | Pays freight + minimum insurance to port |
Summary of the ICC Incoterms 2020 publication, the official source for the division of risk and cost under each rule.
What Changed in Incoterms 2020 (Source: ICC)
Three updates matter to an active buyer:
- DAT became DPU. The old “Delivered At Terminal (DAT)” was renamed “Delivered At Place Unloaded (DPU)” — the only rule where the seller must unload. The name broadened so the delivery point is not limited to a terminal; it can be any named place (e.g., your warehouse) with unloading on the seller.
- FCA + on-board B/L solution. The ICC added an option so that under FCA the parties can agree the buyer’s carrier issues an on-board bill of lading after FCA delivery — a fix for a real-world problem where buyers under a letter-of-credit needed an on-board B/L that FCA’s delivery point did not naturally produce.
- Insurance levels. Under CIP the required insurance was raised to cover Institute Cargo Clauses (A) (all-risks level), while CIF keeps the lower Institute Cargo Clauses (C) minimum. This means for containers, CIP is now the stronger-insurance carriage term.
The Seven “Any Mode” Rules Explained for Bag Buyers
Modern multimodal shipping — factory trucking to the port, ocean, then inland rail or truck to your door — is best served by the any-mode family.
EXW — maximum control, maximum responsibility
Under EXW the seller only makes the goods available at their premises; you arrange inland China transport, export formalities, ocean freight, insurance, import, everything. It is often quoted at the lowest base price — misleadingly, because export formalities and inland moves that an FOB seller would manage inside the quote are now outsourced to you. Best for experienced importers with logistics presence in China; worst for a first-time buyer. (Contrast FOB vs EXW in our import guidance.)
FCA — the multimodal workhorse
FCA delivers the goods to a carrier (or terminal) you nominate at a named place, with the seller clearing export. Risk shifts when the goods are handed to the carrier. It is the modern, multimodal-friendly alternative to FOB, and pairs cleanly with containerized cargo.
CPT and CIP — seller-paid carriage
Under CPT the seller pays carriage to the named destination; under CIP they also buy insurance (at the higher ICC Clauses A level under 2020). In both, risk transfers to you when the goods are handed to the first carrier — even though the seller pays the freight. Know that gap: the seller may pay the bill, but the risk is yours mid-voyage.
DAP, DPU and DDP — delivered to you
DAP delivers to the named place, buyer unloads. DPU adds unloading on the seller. DDP means the seller bears everything to your door including import duty and taxes — the most hands-off for you, and the term with the most bundled cost and legal nuance about the importer-of-record role in the destination (see below).
The Four Sea/Inland-Waterway Rules
These four apply only when cargo moves by sea or inland waterway — which is why they dominate ocean bag imports.
- FAS — goods placed alongside the vessel. Rare for bag imports; you would normally pick FOB instead.
- FOB — seller loads on board the vessel at the named port of shipment; risk shifts as the goods are on board. The most common term for bag imports from Chinese ports.
- CFR — seller pays freight to the destination port, but risk transfers to you on board the vessel, and the seller provides no insurance.
- CIF — seller pays cost, insurance (minimum, ICC Clauses C) and freight to the destination port; risk still transfers to you on board. It looks “all-in” but is not — the seller bears transit cost, not transit risk.
The Responsibility Split in One Picture
| What needs doing | EXW | FOB | CIF | DAP | DDP |
|---|---|---|---|---|---|
| Inland China transport to port | Buyer | Seller | Seller | Seller | Seller |
| Export / China customs formalities | Buyer | Seller | Seller | Seller | Seller |
| Main ocean freight | Buyer | Buyer | Seller | Seller | Seller |
| Cargo insurance | Buyer | Buyer | Seller (min.) | Seller | Seller |
| Import / destination customs | Buyer | Buyer | Buyer | Buyer | Seller |
| Import duty & taxes | Buyer | Buyer | Buyer | Buyer | Seller |
| Unloading (when delivered) | Buyer | Buyer | Buyer | Buyer | Buyer* |
| Risk to buyer | At factory | On board vessel | On board vessel | At your door | At your door |
*Under DDP the buyer is typically responsible for unloading — the seller’s DDP obligation stops at “ready for unloading.” Use DPU if you want the seller to unload too.
How to Choose for Your Bag Order
Stop memorizing definitions; answer four questions:
- One-off or a repeat program? One-off/small first order → DDP (simplicity). Repeat program → FOB (control and cost).
- Do you have your own forwarder and broker? Yes → FOB, and negotiate the freight yourself. No → DDP, or let us line up a forwarder.
- How much mid-voyage risk do you want to hold? Little → DDP (confirm insurance is real). Comfortable once on board → FOB or CIF.
- Price transparency or one-line simplicity? Itemize freight → FOB. One all-in number → DDP.
| Your situation | Recommended term | Why |
|---|---|---|
| First import, no forwarder/broker, want it simple | DDP | Delivery + duty + taxes bundled |
| Repeat program, bulk MOQ, cost control | FOB | You control freight and shop rates |
| Seller quotes bundled price, EU/Middle East trade | CIF | One pre-packaged freight price; check risk handover and minimum insurance |
| Experienced, own logistics in China | EXW | Maximum control, lowest base price |
The DDP caveat every importer must hear
Importer-of-record reality: in the US and several other markets, the importer of record is the party legally responsible for the entry, duty and recordkeeping — and a purely foreign seller cannot always lawfully hold that role. A genuine DDP in those markets typically requires a licensed broker (or an accepted agent arrangement) on your side of the border. Make your DDP quote name a real, licensed broker ; otherwise “DDP” may be a repackaged CIF that still leaves the customs liability with you.
How JUNYUAN Applies Incoterms 2020
Through our export entity, QUANZHOU JUNYUAN COMMERCIAL AND TRADING CO., LTD. (Customs code 35059619KU; established 2014; founder’s bag-industry experience from 2004), we quote and ship on FOB, CIF and DAP/DDP depending on your market and experience, and we always state the Incoterms 2020 edition and named place/port on the PO and quote. Production is anchored on an affiliated factory — SGS-verified for Alibaba.com in March 2026 at 4,950 sqm, 7 production lines, 149 machines and 137 staff, monthly line capacity 200,000 pieces — plus two branch plants and partner facilities. On FOB terms you control the booking and can pair the B/L release with your payment structure (see payment terms); on DAP/DDP we coordinate the delivered leg. Pick the term that matches your forwarder relationships, volume and risk appetite — and let us price it cleanly around your choice.
FAQ
Q: What are the 11 Incoterms 2020 rules?
Seven for any mode — EXW, FCA, CPT, CIP, DAP, DPU, DDP — and four for sea/inland waterway only — FAS, FOB, CFR, CIF. They define the division of risk and cost between buyer and seller, and are published by the ICC.
Q: What changed in Incoterms 2020 vs 2010?
DAT was renamed DPU (Delivered At Place Unloaded) and is now the only rule obligating the seller to unload; an FCA option was added so a buyer can obtain an on-board bill of lading; and CIP insurance was raised to Institute Cargo Clauses (A).
Q: What is the difference between FOB and CIF?
Both are sea-only terms where risk transfers to you when the goods are loaded on board. FOB has the buyer pay the main ocean freight; CIF has the seller pay freight and minimum insurance to the destination port. In neither does the seller carry the transit risk.
Q: What is the difference between FOB and EXW?
Under EXW the seller only makes the goods available at their premises and you handle all inland China transport, export formalities, freight and import. Under FOB the seller loads the goods on board the vessel at the named shipment port, and you take over for the international freight and import — much less coordination on you.
Q: Is DAP the same as DDP?
No. DAP delivers to a named place but import duty, taxes and import clearance remain on the buyer. DDP adds import duty, taxes and clearance onto the seller — the most hands-off for you, and the term needing a real licensed broker in your market.
Q: What is DPU?
DPU — Delivered At Place Unloaded — is the renamed DAT. The seller must deliver to a named place and unload. It is the only Incoterm that obligates the seller to unload.
Q: Is DDP right for a first-time bag importer?
Often yes — it bundles freight, duty, taxes and import clearance so you receive goods at your door with minimal logistics work. The trade-offs are a higher bundled price, less freight control, and the need for a licensed broker on your side so “DDP” is real.
Q: Which Incoterm should I use to import bags from China?
Most buyers default to FOB Xiamen/Shenzhen for control and cost; first-time or low-volume buyers often prefer DDP for simplicity; experienced importers may use EXW. Confirm the named place/port, Incoterms 2020 edition, insurance and who clears import — in writing, before booking.
Next Step: Lock Your Term Before You Book
The right Incoterm is a commercial decision, not a dictionary lookup — and it belongs in the same conversation as the price. Tell us your target market, quantity, forwarder setup and risk appetite, and we’ll recommend the term and price the order around it.
Get a Clean Quote on Your Preferred Term
Send your bag design and quantity — we’ll return production timing and a clear Incoterms 2020 recommendation (FOB, CIF, DAP or DDP) with a pricing structure to match.
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