Where does the risk change hands?

An Incoterm names the point where the seller’s responsibility ends and yours begins. Incoterms 2020 has eleven of them; a first shipment from Asia to the United States almost always uses one of three.

EXW: what am I responsible for?

Under Ex Works the factory makes the goods available at its own door and does nothing else. Your forwarder collects, handles export clearance, the sea or air leg, import clearance and delivery. It gives you the most control and the lowest factory price, and it puts every step, including export paperwork in the factory’s country, on your side.

FOB: what does the factory do?

Under Free On Board the factory delivers the goods, export-cleared, on board the vessel at the named port. Risk passes when the goods are on board; from there, your forwarder runs the sea leg, import clearance and delivery. FOB is the term most first-time importers use, because the factory handles the part it knows, its own country’s export process, and you handle the part your forwarder knows.

DDP: is delivered duty paid worth it?

Under Delivered Duty Paid the seller or its forwarder delivers to your address with duties and import clearance paid. It is the lowest-complexity option and often the highest price, because someone is charging you for the risk and the paperwork. Ask who is the importer of record and what duty rate was assumed; if that figure is wrong, the surprise arrives at delivery.

Which one should a first shipment use?

Most small importers into the United States use EXW, FOB or DDP. The honest test is one question: do you have a forwarder you trust? If yes, FOB. If not yet, DDP for the first shipment while you find one. EXW when you already run your own logistics.

How long does a first shipment take?

Factories usually quote 30 to 45 days of production for a first order. Sea freight from China to the United States usually takes 25 to 45 days port to port, shorter to the West Coast and longer to the East Coast, with 5 to 10 days more in peak season, which runs from late summer until before Chinese New Year. A first order is therefore usually a two- to three-month project from deposit to delivery, before customs. No date is real until the factory has confirmed it in writing.

How we use this on a project

The Incoterm and the port go on the terms sheet with the factory. Freight stays with the forwarder you choose; we hand over the documents. The brief asks which Incoterm you have used before, so the reply can start from the right one.