Incoterms for Amazon sellers: FOB vs EXW, and the rest

Incoterms are rules published by the International Chamber of Commerce (ICC) that say what a seller and a buyer each do in an international sale. The current edition, Incoterms 2020, came into effect on 1 January 2020, and as of October 2026 the ICC has not replaced it. There are 11 rules.

Each rule sets where the seller delivers the goods, when the risk passes to the buyer, who pays which costs, and who handles export and import formalities. They do not set the price, the payment terms, or when ownership passes: those belong in your purchase contract.

Seven rules work for any mode of transport, and four are for sea and inland waterway only:

• Any mode: EXW (Ex Works), FCA (Free Carrier), CPT, CIP, DAP (Delivered at Place), DPU and DDP (Delivered Duty Paid).
• Sea and inland waterway: FAS, FOB (Free on Board), CFR and CIF.

Under EXW the supplier makes the goods available at its own premises, and that is all. You, the buyer, collect them, load them and handle export clearance in the supplier’s country. Under FOB the supplier clears the goods for export and delivers them on board the vessel at the named port; the risk passes to you once they are on board.

For a buyer outside China, the practical difference is export clearance. Under EXW it is yours, in a country where you have no office. Under FOB the supplier, who knows its own customs, does it.

Line the two terms up against the journey from the factory in China to the port there:

• Loading at the factory: under EXW the buyer pays (the supplier has no duty to load); under FOB the supplier does.
• Trucking to the port of loading: EXW, the buyer; FOB, the supplier.
• Export clearance in China: EXW, the buyer; FOB, the supplier.
• Loading on board the vessel: EXW, the buyer; FOB, the supplier.
• Ocean freight, insurance, import clearance, duty and delivery to the warehouse: the buyer under both.

FOB is a sea rule built around goods being put on board a ship. Containers are usually handed to the carrier at a terminal or a depot before loading, so the point where FOB says risk passes is not where your goods change hands. Trade guides based on Incoterms 2020 recommend FCA for containers: the supplier clears export and hands the goods to your carrier at the named place.

If your supplier insists on FOB, it still works in practice; just know when your risk starts, and insure from the hand-over if the goods are valuable.

DAP and DDP are rules where the seller takes the goods all the way to the destination. Under DAP the buyer clears import and pays the duty; under DDP the seller does both. An Amazon seller rarely buys DDP from a supplier. More often you buy FOB or FCA from the supplier, then hire a forwarder to deliver duty paid to the fulfilment centre. The DDP calculator shows what a duty-paid price is made of.

For most sellers buying from China for Amazon, one of these set-ups:

• FCA or FOB from the supplier, then your forwarder to the fulfilment centre. You control the freight; the supplier handles export.
• EXW only if your forwarder can clear export in China for you; ask before you agree to it.
• DDP from the supplier only if you trust its forwarder and want one price; you give up control of the freight and see less of the cost.

• Agreeing EXW with nobody arranged to clear export in China.
• Leaving out the named place: “FOB” means little without “FOB Ningbo”.
• Expecting Incoterms to settle payment or ownership. They do not.
• Assuming the risk is yours only from arrival. Under FOB and FCA it is yours from the hand-over.
• Quoting the 2010 rules: say “Incoterms 2020”.

The shipment form asks for the term the carrier delivers on — DDP, DAP, FOB, EXW or CIF — and who handles customs at the destination. Every carrier bidding prices the same terms. See importer of record and who handles customs at the destination.