When importing from China, have you ever felt confused when your supplier asks, "Which trade terms do you prefer?" You see three-letter acronyms like EXW, FOB, CIF, and DDP, but what do they actually mean for your wallet and your liability?
Many importers want to take control of their logistics-hiring their own freight forwarder instead of relying on the supplier's designated agent-to ensure better service and transparent costs. This guide will help you understand your responsibilities and how to coordinate with both your supplier and us, Senghor Logistics.
Part 1: Negotiating with Your Supplier (The Origin Side)
The first critical decision happens before the goods even leave the factory -who pays for what, and who takes the risk at each stage? This is determined by the Incoterm you agree on with your supplier.
1. EXW (Ex Works) - Maximum Control, Maximum Responsibility
What it means: The supplier's only obligation is to make the goods available at their factory or warehouse. Once the goods are ready and you are notified, their responsibility ends.
Your responsibility: You handle everything from that point onward - pickup from the factory, export customs clearance, international freight, insurance, import clearance, duties, and final delivery to your door.
Why choose it:EXW typically gives you the lowest product price, since the supplier isn't bundling any logistics costs into their quote. However, it also means you carry the most risk and coordination burden. If you have a trusted forwarder like Senghor Logistics, we can manage the entire pickup and export process on your behalf, turning EXW into a seamless experience.
Best for:Buyers who want full visibility and control over the supply chain, or those working with suppliers who are unwilling or unable to handle export procedures.
2. FOB (Free on Board) - The Balanced Choice
If you are shipping heavy or bulky cargo via sea freight, FOB is often the industry standard and the most widely used term in international trade.
What it means: The supplier is responsible for all costs and risks until the goods are loaded onto the vessel (or handed over to your carrier at the port). This includes inland trucking to the port, warehouse handling fees, and export customs declaration.
How we work together:
1). Once you confirm the product price with your supplier, ask them to send us the Booking Form with cargo details (weight, volume, commodity, ready date).
2). We (Senghor Logistics) will book space with the shipping line and issue the Shipping Order (SO).
3). We provide the SO and Warehouse Entry Notice to your supplier.
4). Your supplier arranges the truck to deliver the goods to the designated port or warehouse.
Benefit: You control the main ocean/air freight costs - which is where the biggest savings can be made - while the supplier handles the local "hassle" at origin. It's a fair split of responsibility.
Best for: Most sea freight shipments, especially when you want to control freight costs but don't want to deal with origin-side logistics.
Part 2: Coordinating with Senghor Logistics (The Destination Side)
Once the goods are ready to move, you need to decide how much service you want from us. Do you want "Port-to-Port" or "Door-to-Door"? Each option comes with different levels of convenience, cost, and responsibility.
Option A: Port-to-Port (CFR / CIF)
Best if you have your own customs broker in your country and prefer to pick up goods directly from the destination port.
CFR (Cost and Freight): We cover the ocean or air freight to your destination port. Insurance is NOT included. If anything happens during transit, the risk is yours.
CIF (Cost, Insurance and Freight): CFR + Marine Insurance. We arrange cargo insurance on your behalf, so you're protected against loss or damage during the voyage.
Our advice:For high-value goods or long sea voyages, we highly recommend CIF. The insurance premium is relatively small compared to the value of your cargo, and it gives you peace of mind.
Option B: Door-to-Door (DAP / DDU / DDP)
Best if you want a hassle-free experience where we deliver straight to your warehouse - no need to coordinate with a local broker or arrange inland trucking yourself.
DAP (Delivered at Place):
We handle transport all the way to your specified delivery address. However, you are responsible for import customs clearance and paying duties/taxes in your country.
DDU (Delivered Duty Unpaid) - The "Old" Term:
Technically replaced by DAP in Incoterms 2010/2020, but still widely used in the logistics industry. It implies we handle the transport and can assist with customs clearance (often requiring a Power of Attorney), but you still pay the taxes and duties.
Key benefit of DAP/DDU: You use your own company tax ID (EORI/VAT number) for clearance, which means you can claim import VAT deductions later - an important advantage for registered businesses.
DDP (Delivered Duty Paid) - The "All-In" Solution:
We handle everything: transport, customs clearance, AND duties/taxes. You pay one final all-inclusive price, and the goods arrive at your door with zero hassle.
Critical Warning for Businesses:
DDP is extremely popular for e-commerce sellers (especially Amazon FBA) and small importers who want simplicity. However, there are important trade-offs:
Shipments are often cleared under a shared customs header (the forwarder's bond), not under your company name.
This means you cannot get an official tax invoice in your company's name - and therefore cannot reclaim import VAT or claim tax deductions.
If one item in a consolidated container is flagged or detained by customs, the entire container may be delayed, affecting all shipments inside.
Our recommendation: For legitimate wholesale and B2B businesses, we recommend DAP or DDU. This way, you maintain full compliance, keep proper tax records under your own company name, and retain the ability to reclaim taxes - all while still enjoying the convenience of door-to-door delivery.
Try our service: sales12@senghorlogistics.com
| Common Trade Terms Cost Nodes: Below S represents Seller, B represents Buyer | |||||||
| Cost / Term | EXW | FOB | CNF | CIF | DAP | DDU | DDP |
| Domestic Drayage | B | S | S | S | S | S | S |
| Export Customs Declaration | B | S | S | S | S | S | S |
| Certificate of Origin | B | S | S | S | S | S | S |
| Forwarder Local Charges | B | S | S | S | S | S | S |
| Ocean Freight | B | B | S | S | S | S | S |
| Insurance | B | B | B | S | S | S | S |
| Destination Port Charges | B | B | B | B | S | S | S |
| Destination Customs Clearance | B | B | B | B | B | S | S |
| Destination Customs Duty | B | B | B | B | B | B | S |
| Destination Drayage / Delivery | B | B | B | B | B or S | S | S |
Why Choose Senghor Logistics?
Whether your supplier sells EXW or FOB, we have the experience to handle it. We have warehouses in major Chinese port cities and specialize in consolidation services. Even if you are buying from multiple suppliers with different terms (some EXW, some FOB), we can collect everything into one shipment to save you money.
