For most small US importers and Amazon sellers, FOB (Free On Board) at a named Chinese port is the best Incoterm for ocean freight, and FCA is a good alternative for air or when goods leave from an inland site. Avoid EXW unless you have a forwarder who will handle everything at the factory gate, and treat DDP quotes with care because they can hide costs and leave you unclear on who is the importer.
Incoterms are standard trade terms published by the International Chamber of Commerce. They state who arranges and pays for each leg of a shipment, and the point where risk of loss passes from seller to buyer. The current set is Incoterms 2020. Your supplier quote is only comparable to another quote if both use the same term, so this is worth understanding before you compare prices.
Why Incoterms matter more than they look
Two suppliers can quote $4.00 and $4.40 for the same item and the cheaper one may cost more. If the first quotes EXW and the second quotes FOB, the $4.00 price excludes factory loading, trucking to port, export clearance and origin port charges. Those can easily exceed the $0.40 gap, and they are often charged to you as separate invoices that arrive after the order is committed.
The five terms you will actually see
EXW: Ex Works
The seller makes the goods available at its own premises. The buyer arranges everything else: loading, trucking, export clearance, freight and insurance. Risk passes to you at the factory door. EXW looks cheapest but it puts the most work on you, and in China it often means a forwarder you hire has to deal with a factory that is not used to export paperwork. It is a reasonable choice only if your forwarder has a China office that handles pickup and export customs routinely.
FCA: Free Carrier
The seller delivers the goods, cleared for export, to a carrier or place you name. FCA is generally a better option than EXW because the export clearance becomes the seller's job. It works for any mode of transport, including air and trucked consolidations.
FOB: Free On Board
The seller delivers the goods on board the vessel you nominate at the named port of shipment, for example FOB Xiamen or FOB Ningbo. The seller pays origin trucking, export clearance and port charges up to loading. You pay ocean freight, destination charges, duty and everything after. Risk passes once the goods are on board. FOB applies to sea and inland waterway transport only, so it is not correct for air freight, which is a common mistake on quotes.
CIF: Cost, Insurance and Freight
The seller pays for freight to your named US port and for minimum insurance cover, but risk still passes at loading in China. The seller picks the carrier, so you have little control over the schedule or the forwarder. The default insurance is minimum cover only, so you may want your own policy on top.
DDP: Delivered Duty Paid
The seller takes on almost everything, including import clearance and US duties, and delivers to your named place. DDP sounds easy, but ask who is acting as the importer of record. For Amazon FBA, you generally want to be the importer of record on your own account so that duties, customs bonds and entry records are in your name. Many "DDP" quotes from forwarders are really door-to-door services in which the forwarder handles customs on your behalf, and they are worth comparing line by line.
Which one fits your situation
- First ocean shipment, one supplier: FOB at a named port. You get clear cost boundaries and a forwarder of your choice.
- Air freight or urgent samples: FCA at the supplier's city or airport, or a door-to-door service quoted in writing.
- Several suppliers into one container: FCA or FOB from each, with your forwarder consolidating. EXW is the usual fallback here, but only if your forwarder is experienced in China pickups.
- You want a single all-in price: Ask for a door-to-door quote that spells out duties, customs bond and delivery to the FBA warehouse. Do not assume DDP covers all of it.
Details that catch importers out
- Always name the place. "FOB China" means nothing. Write "FOB Xiamen, Incoterms 2020". Without the port, disputes over who pays which charge are common.
- Origin charges. Under FOB, terminal handling charges at the origin port should be in the supplier's price. Confirm that in writing, since some suppliers bill them separately.
- ISF filing. For ocean shipments into the US, the importer must file the Importer Security Filing at least 24 hours before the cargo is loaded on the vessel at the foreign port. Late or wrong filings carry penalties, so give your forwarder the manufacturer and shipping details early.
- Insurance. Under FOB and FCA, risk is yours from loading. Buy cargo insurance in your name. Do not assume the supplier's CIF minimum cover is enough for your goods.
- Inspection timing. Whichever term you use, schedule a pre-shipment inspection before the goods are handed over, because once risk passes, a problem is yours.
- Duties are separate. Incoterms do not set tariff rates. Duties depend on the HTS classification and country of origin, and they are paid at US import under any term other than DDP.
Writing it into the purchase order
State the term on the quote, the purchase order and the commercial invoice, using the same wording each time: "FOB Xiamen, Incoterms 2020". List separately who pays for inspection, packaging, labeling and any export documents your customs filing needs. Where you manage factory pickup yourself, our logistics management service handles booking, documents and customs, and the warehouse and fulfillment service can receive goods in the US for FBA prep.
If you are comparing quotes and some use different terms, send them to us and we will put them on the same basis so you can see the real landed cost. For inspection before payment, see quality inspection.