In short: EXW, FCA, FOB, CFR, CIF, DAP and DDP from the forwarder's side: where your import quote starts and what to exclude.
The Incoterm in a quote request tells you where your quote starts. Get it wrong and you either charge the importer for something their supplier already paid, or leave out a cost that lands on them later. This article goes through the seven rules Australian importers ask for most often, from the forwarder's side: which charges belong in your quote under each one.
Incoterms 2020 is a set of eleven three-letter trade terms published by the International Chamber of Commerce. The 2020 edition renamed DAT as DPU and revised FCA so that sea shipments can use an on-board bill of lading (ICC, Incoterms 2020). The rules decide who pays and who carries the risk between buyer and seller. They don't set your price; they set the boundary of it.
"FOB" on its own isn't enough. FOB Ningbo and FOB Shanghai are different quotes. EXW with a factory address in Foshan means a pickup you have to price. DAP "Melbourne" might mean the port or the importer's warehouse. Every Incoterm comes with a named place, and if the request doesn't give one, ask.
Under Ex Works the seller makes the goods available at its premises, and nearly everything from there is the buyer's. Your import quote includes pickup from the supplier, export clearance, origin terminal or CFS charges, the main freight, then everything at destination. In practice, export clearance under EXW is awkward for an overseas buyer, so confirm your origin agent can do it, and say who's lodging it.
Under Free Carrier the seller delivers the goods, cleared for export, to the carrier at a named place. The ICC describes FCA as suitable for any mode of transport and well suited to containerised cargo (ICC Academy, FCA or FOB). If the named place is the seller's premises, your quote includes the pickup but not export clearance. If it's your origin agent's CFS, your quote starts there.
Under Free On Board the seller clears the goods for export and risk passes once they're loaded on board at the named port. The ICC says FOB is for sea and inland waterway transport only, port to port (ICC Academy). Your quote starts with the ocean freight. Origin terminal handling and export clearance are the supplier's. FOB is still the most common term in Australian import requests from Asia, even for containers, so quote it as asked and state where your quote starts.
Under Cost and Freight the seller also pays the ocean freight to the named destination port. CIF adds insurance bought by the seller. The ICC notes that CIF is reserved for maritime trade (ICC). For you, both mean the same thing: the freight is already paid, so your quote covers destination charges, clearance and delivery only.
Two things to watch. Risk passes to the buyer when the goods are loaded at origin, even though the seller pays the freight, so the importer is carrying risk on a voyage they didn't book. Under CIF the seller's insurance may be minimal cover, so offer to quote the importer their own marine insurance. And some destination charges on CFR and CIF shipments are set by the seller's forwarder's agent, not by you, so tell the importer you're quoting your charges and they may also be billed by the carrier's agent.
Under Delivered at Place the seller delivers to the named destination, ready for unloading, and the buyer handles and pays for import clearance (ICC Academy, DAP or DDP). If an Australian importer is buying DAP, the overseas seller's forwarder has organised the freight, and your role is often just customs clearance, possibly with unloading. Quote the brokerage, the government charges at cost, and an estimate of duty and GST as disbursements.
Under Delivered Duty Paid the seller handles and pays for export, transit and import clearance (ICC Academy). If the importer is buying DDP, they shouldn't be asking you for a quote at all, except perhaps for unloading. Where you're more likely to see DDP is an overseas seller asking you to deliver into Australia on their behalf. The ICC warns that foreign sellers may struggle with import formalities in the destination country and that DAP may be the better term where local rules require the importer to clear the goods. Before you quote DDP, work out who will be the importer of record, who will pay duty and GST, and whether anyone can claim the GST back.
Term Your import quote starts at You quote
---- ------------------------------- -------------------------------------
EXW Supplier's premises Pickup, export clearance, origin
charges, freight, destination, clearance,
delivery
FCA Named handover place Freight from that point, destination,
clearance, delivery (+ pickup if at seller)
FOB On board at origin port Freight, destination, clearance, delivery
CFR Destination port Destination charges, clearance, delivery
CIF Destination port As CFR (offer the buyer's own insurance)
DAP Named place, uncleared Clearance, duty/GST estimate, unloading
DDP Named place, cleared Usually nothing for the buyer
Whatever the term, put one sentence near the top of the quote: "Quoted on FOB Ningbo terms: origin charges and export clearance are for the supplier's account." It heads off the commonest dispute, and if the importer has the wrong term on their purchase order, it gives them the chance to tell you before the shipment moves.
The full line-by-line layout for an FOB import is in what a complete FCL quote from China to Australia includes, and the clearance lines are covered in what goes into a customs brokerage quote in Australia.
For the full layout of an air quote, including which lines sit on which side of the Incoterm, see the air freight quote template.
Laneworks reads the Incoterm and named place from the customer's email and drafts the quote from the right starting point, with a sentence saying so. If the term is missing, the draft asks. You can see a sample draft, or forward a real request to try@getlaneworks.com and get one back in about two minutes.
Forward a quote request