Incoterms explained: EXW, FOB, CIF and DDP for UK importers
An Incoterm is three letters on the quote that say where the supplier's costs and risk end and yours begin. Getting it right avoids surprise bills at the port.
| Term | Supplier pays up to | Good to know |
|---|---|---|
| EXW (Ex Works) | Goods ready at the factory | You arrange and pay for everything, including export clearance in China |
| FCA (Free Carrier) | Handed to your forwarder, export cleared | A cleaner version of EXW |
| FOB (Free On Board) | Loaded on the ship in China | The usual choice for sea freight; you control the main transport |
| CIF (Cost, Insurance and Freight) | Sea freight and basic insurance to the UK port | Risk passes to you when the goods are loaded; UK charges are yours |
| DDP (Delivered Duty Paid) | Delivered with duty and tax paid | Check who is the importer: you may not get the VAT records you need |
Which one for a first order?
FOB is the common middle ground: the factory handles China, and your own forwarder handles the sea leg and UK customs, so you can compare prices and keep control. If the supplier offers CIF, compare it with an FOB price plus your own freight quote; UK destination charges can make CIF dearer than it looks.
Next steps
Read how to import from China, then compare freight rates from the Chinese port to your door.
Sources
Questions people ask
Is FOB or EXW better when importing from China?
For most small importers FOB, because the supplier handles export clearance and loading in China, which is harder to arrange from the UK.
Should I accept DDP?
Only if you understand who is named as importer. If you want to reclaim import VAT you need the customs entry in your own business name.