Incoterms are a set of standard trade terms published by the International Chamber of Commerce; the current edition is Incoterms 2020. Each one is a three-letter code that answers two questions: which costs are included in the price, and at what point the risk of loss or damage passes from the seller to you. Five of them cover almost everything a UAE buyer will see.
EXW — Ex Works
The price is for the goods at the supplier's door, and nothing else. You arrange and pay for collection, export clearance in the supplier's country, freight, insurance, import clearance and delivery. EXW looks cheapest and is often the most work, and export clearance can be difficult to arrange from abroad. It suits buyers with a freight forwarder who handles everything from pickup.
FOB — Free On Board
The supplier delivers the goods onto the ship at a named port of departure — "FOB Shanghai" — with export clearance done. From the moment the goods are on board, the freight, the insurance and the risk are yours. FOB is the most common way factories in China and India quote, and it is a good default for buyers who have, or can get, a forwarder to book the sea freight. It is for sea freight only.
CIF — Cost, Insurance and Freight
The supplier pays freight and minimum insurance to a named destination port — "CIF Jebel Ali". Two things catch buyers out. First, the risk still passes to you when the goods are loaded at origin, even though the supplier paid the freight, so a claim for damage at sea is made on the insurance, not against the supplier. Second, the insurance included is the minimum cover, which may be less than you would choose. Like FOB, CIF is for sea freight.
DAP and DDP — delivered
DAP (Delivered at Place) means the supplier delivers to a named place, often your warehouse, but you handle import clearance and pay the duty and VAT. DDP (Delivered Duty Paid) means the supplier handles everything including import duty. DDP is the simplest for a buyer and the hardest for a foreign supplier to offer, because they need to clear goods into the UAE — so it is uncommon from overseas factories and normal from local traders, whose prices are effectively delivered.
The cheapest-looking quote is often the one that has left the most of the journey to you.
Which one to ask for
- First import, no forwarder: ask for CIF Jebel Ali (or your nearest port) and get a clearing agent quote for the rest. The fewest moving parts.
- Regular importer with a forwarder: ask for FOB. You control the freight, can consolidate suppliers, and usually pay less for shipping than a supplier would charge you.
- Small or urgent orders by air or courier: ask for DAP or a door-to-door price, and confirm who pays duty and VAT.
- Comparing a local trader with an overseas factory: convert everything to a landed cost in your warehouse first. What duty and VAT add shows how.
Quick answers
Does the Incoterm decide who owns the goods? No. Incoterms cover costs, risk and delivery, not ownership or payment. Those are set by your contract and payment terms.
What is FCA? Free Carrier: the supplier hands the goods to your carrier at a named place. It does the job FOB does for containers and air freight, and many forwarders prefer it.
Asking every supplier on the same basis
A comparison only works if every supplier quotes on the same Incoterm. International requests in our AI procurement platform send one approved message to every supplier — so you can state the basis once and have it asked of all of them — and convert each quote into your currency at the day's rate. How buying from China works with it.