Key takeaways
- An Incoterm decides who pays and where risk transfers — not who owns the goods
- FOB is the most common term for project materials: supplier delivers to the port, you control the freight
- CIF adds freight and insurance to the destination port but not customs
- DAP brings goods to your door but leaves duties to you; DDP includes everything
- Always state the named port or place and the Incoterms year (e.g. FOB Foshan, Incoterms 2020)
- Buy cargo insurance even when the term includes it — check the cover, not just the label
1. What an Incoterm actually controls
Incoterms are three-letter trade terms published by the ICC. They define four things and nothing more:
- Where the seller's responsibility ends and the buyer's begins
- Who arranges and pays for carriage
- Where the risk passes from seller to buyer
- Who handles export and import clearance and pays duties
They do not transfer ownership, and they do not cover payment terms, quality or title. Those belong in the contract.
2. The terms building material buyers actually use
| Term | Seller does | Buyer does | Risk passes |
|---|---|---|---|
| EXW | Makes goods available at the factory | Everything, including loading | At the factory |
| FOB | Delivers and loads at the named port of export | Freight, insurance, import | When loaded on the vessel |
| CFR | Adds freight to destination port | Insurance, import | When loaded on the vessel |
| CIF | Adds freight + insurance to destination port | Import clearance and duties | When loaded on the vessel |
| DAP | Delivers to your named place | Import duties and clearance | At the named place |
| DDP | Delivers, clears import and pays duties | Unloading | At the named place |
3. FOB: the default for most projects
FOB (Free On Board) is the usual choice for building materials. The supplier delivers the packed goods to the named export port and loads them onto the vessel; from there, you or your forwarder control the freight. The advantages:
- You choose the freight forwarder and can consolidate several suppliers into one shipment.
- You see the true freight cost instead of a margin buried in a CIF number.
- You control the sailing schedule and the documents.
The trade-off: you must arrange the freight and insurance yourself. Note that with containerised goods, risk passes when the container is loaded, not when it reaches the port.
4. CIF and CFR: freight included, control given up
CIF adds cost, insurance and freight to the destination port. It is convenient — especially for a first order — but the freight is priced by the supplier, the insurance cover may be minimal, and you have no control over the forwarder or the sailing. CFR is the same without insurance. Risk still passes at the export port, so a CIF container damaged at sea is your claim, not the supplier's.
5. DAP and DDP: door delivery, and the duty trap
DAP delivers to your named place but leaves import clearance and duties with you. DDP goes further and includes them, giving a single landed number — attractive, but:
- DDP requires the seller to know your country's duty rates and rules; errors surface as surprise invoices.
- Not every destination allows a foreign seller to be the importer of record.
- DDP can hide a large freight and duty margin inside the unit price, making comparison hard.
For most project buyers, FOB plus your own forwarder is cheaper and more transparent; DDP suits small, urgent orders where convenience outweighs the margin.
6. Where the risk really sits
Risk transfer and cost transfer are not always in the same place. Under FOB and CIF, risk passes at the export port even though the goods keep travelling. That is why cargo insurance matters: if the container is lost or damaged at sea, the claim is yours. Check what the cover actually pays — many marine policies exclude breakage from poor packing unless endorsed.
7. Choosing the right term for your destination
- Multiple suppliers, one shipment: FOB + your forwarder + consolidation.
- First order, little experience: CIF to a familiar port, then take over.
- Small, urgent, door delivery wanted: DDP, accepting the margin.
- You have a customs broker: DAP or FOB and clear it yourself.
8. Common mistakes
- Omitting the named port/place — "FOB China" is not a valid term.
- Mixing Incoterms years in one contract.
- Assuming CIF insurance is comprehensive.
- Forgetting that under FOB, loading costs and terminal charges can still be yours depending on the exact wording.
9. How VIGOHOME ships
VIGOHOME quotes FOB by default from the Foshan/Guangzhou ports, works with your nominated forwarder, and can quote CIF or DDP on request. Packing lists, container photos and loading plans are issued against the agreed term so you always know where responsibility sits. See the one-stop service page, and pair this with how many categories fit in one container.
Frequently asked questions
What does FOB mean for a building material order?
FOB (Free On Board) means the supplier delivers the packed goods to the named export port and loads them, after which freight, insurance and import are the buyer's responsibility. It is the usual term for project materials because you control the forwarder and see the real freight cost.
Is CIF or FOB better for importing from China?
Usually FOB plus your own forwarder, because it is more transparent and lets you consolidate several suppliers into one shipment. CIF is convenient for a first order but the freight is priced by the supplier and you have less control, and risk still passes at the export port.
What is the difference between DAP and DDP?
DAP delivers to your named place but leaves import clearance and duties to you. DDP includes those too, giving one landed price, but it hides freight and duty margins and is not permitted at every destination.
Does the Incoterm include cargo insurance?
Not automatically in a useful way. Under CIF the seller provides insurance to the destination port, but the cover may be minimal. Under FOB and CFR you arrange it yourself. In all cases check what the policy actually covers, especially breakage from packing.
Next: protect the cargo with how to reduce breakage when shipping tiles and stone.