Guide

Incoterms 2020: FOB vs CIF vs DDP for Ecommerce Shipping

Understand FOB, CIF, DDP, and the other 8 Incoterms 2020 rules. Who pays freight, insurance, duty, and import clearance, and how to choose the right rule for ecommerce catalog shipping.

Use Incoterms 2020 ChartOfficial Sources

What Incoterms are

Incoterms are ICC commercial rules for allocating cost, risk, and responsibilities between buyer and seller in international sales. They do not determine customs duty treatment, import restrictions, or required customs documentation.

The 11 Incoterms 2020

EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, DDP. They cover seller pickup, carrier handover, port delivery, named place delivery, and delivered with duties paid.

FOB in detail

FOB (Free On Board) means the seller delivers the goods on board the vessel at the port of shipment and handles export clearance. The buyer pays main freight, insurance, import clearance, and import duty. FOB is common for ocean freight where the buyer wants to control the main carriage.

CIF in detail

CIF (Cost, Insurance, Freight) means the seller pays freight and insurance to the destination port. The buyer still handles import clearance and import duty. CIF is common when the seller wants to control main carriage but the buyer controls destination taxes.

DDP in detail

DDP (Delivered Duty Paid) means the seller handles freight, import clearance, import duty, taxes, and final delivery. The buyer receives a delivered price. DDP carries the highest seller responsibility and risk.

DAP and DPU in detail

DAP (Delivered at Place) means the seller delivers to a named place, but the buyer handles import clearance and duty. DPU (Delivered at Place Unloaded) adds unloading at the named place. DAP and DPU are common when the buyer controls taxes but wants the seller to handle delivery.

Step-by-step: choosing the right Incoterm

1) Decide who controls main freight and insurance. 2) Decide who controls export clearance. 3) Decide who controls import clearance and duty. 4) Decide who controls final delivery and unloading. 5) Match the answers to the Incoterm matrix. 6) Document the chosen Incoterm on the commercial invoice.

Example

A China-to-USA ecommerce shipment with DDP lets the seller quote a delivered price including US duty, US import tax, and last-mile delivery. A FOB shipment lets the buyer control the ocean freight, the US import broker, and the US duty. CIF is a middle ground for ocean freight where the seller pays main freight and insurance.

Common mistakes

Common mistakes include using Incoterms to imply customs duty treatment (they do not), using the wrong rule for the chosen transport mode, mixing FOB and CIF inputs in the same quote, and not documenting the chosen Incoterm on the commercial invoice.

Source note

Incoterms are ICC commercial rules. Verify the chosen Incoterm with the ICC Incoterms 2020 reference and document it on the commercial invoice.

Maintainer

Reviewed by Ryan Cole

Ryan Cole maintains TariffCatalog from the perspective of a long-time ecommerce operator with 15+ years of experience in product catalog, international shipping, and pre-shipment data workflows. This page is reviewed for guide workflow clarity, source-check clarity, and estimate-only or candidate-only wording.

TariffCatalog is a preparation aid, not a customs broker, legal, tax, or freight-forwarding service. Verify final classifications, rates, documents, and filing treatment with official sources or qualified professionals.

Last reviewed: · Maintainer entity: Ryan Cole · Source policy: verified against official customs and tariff sources

Official source note

References to verify

USITC HTS

Use this official source when checking final classification, duty treatment, or customs requirements.

CBP

Use this official source when checking final classification, duty treatment, or customs requirements.

EU TARIC

Use this official source when checking final classification, duty treatment, or customs requirements.

UK Trade Tariff

Use this official source when checking final classification, duty treatment, or customs requirements.

Related Tool

Turn the guide into a workflow

Use the connected tool to prepare an estimate, draft, or cleanup report. Final filings should still be verified with official sources.

Use Incoterms 2020 Chart
FAQ

Common questions

What is the difference between FOB and CIF?

FOB (Free On Board) makes the seller responsible for cost and risk until the goods are loaded on the vessel at the port of export; the buyer takes over from there. CIF (Cost, Insurance, Freight) makes the seller responsible for cost and insurance through to the destination port, but risk still transfers at the port of export. The difference shows up in who pays international freight and who carries the risk during transit.

What is the difference between DAP and DDP?

DAP (Delivered at Place) makes the seller responsible for delivery to a named place, but the buyer handles import clearance, duty, and tax. DDP (Delivered Duty Paid) makes the seller responsible for delivery, import clearance, duty, and tax. DDP looks simpler for the buyer but exposes the seller to destination rules and to changes in duty or tax during transit.

Do Incoterms decide customs duty treatment?

No. Incoterms decide the allocation of cost, risk, and responsibility between buyer and seller, but they do not change customs duty treatment. Duty, additional tariff, and tax are still determined by the destination tariff and the product’s HS code and origin. The Incoterm 2020 Chart shows that Incoterms sit on top of customs, not in place of it.

How many Incoterms are in Incoterms 2020?

Incoterms 2020 includes 11 terms: EXW, FCA, FOB, FAS, CFR, CIF, CPT, CIP, DAP, DPU, and DDP. Each term defines cost, risk, and responsibility for the buyer and seller across the pre-carriage, main carriage, and post-carriage stages. The Incoterms 2020 Chart in TariffCatalog covers all 11 terms with an interactive responsibility grid.

Which Incoterm is best for ecommerce?

There is no single "best" Incoterm for ecommerce. DDP is common for marketplace sellers who want a fixed delivered price for the buyer; DAP is common when the buyer wants to handle their own import clearance; FOB and CIF are common in traditional B2B international trade. Pick the Incoterm that matches the sales contract, the buyer’s preference, and the seller’s ability to handle destination import rules.

Can I switch Incoterms mid-shipment?

In practice, no. The Incoterm is set in the sales contract, the commercial invoice, and the carrier booking. Changing it mid-shipment requires a contract amendment, a revised invoice, and often a carrier booking update. Switching from DDP to DAP, for example, changes who pays duty at the border and who holds the risk if duty rates change during transit. Confirm the change with all parties before the parcel is in transit.

Do I need to put Incoterm on the commercial invoice?

Yes. The Incoterm should be printed on the commercial invoice so the carrier, broker, and customs authority know which party owns which leg of the journey and which party is responsible for duty. The Incoterm on the invoice should match the Incoterm in the sales contract and the carrier booking. The Commercial Invoice Generator and Proforma Invoice Generator include an Incoterm field for this reason.

Does DDP mean duty-free for the buyer?

No. DDP shifts the responsibility for paying duty and tax from the buyer to the seller, but it does not change the underlying duty and tax that the destination authority charges. The buyer is still protected by destination consumer rules, but the seller carries the cash-flow and compliance risk of paying duty and any storage or return charges if the parcel cannot be delivered.

Last reviewed: 2026-08-02

Disclaimer

TariffCatalog provides informational tools and preparation workflows only. Verify final classification, rates, document requirements, and filing treatment with official sources or licensed professionals.