sourcing · 5 min read

Incoterms for fabric buyers: FOB, CIF, DDP

Two quotes that look identical can differ by 20% once you know which Incoterm they use. The rule is simple: the term decides who books the freight, who insures, and who pays at the destination.

By Weft Bridge · Reviewed by our Guangzhou sourcing team · Updated 2026-11

The three you will actually see

Term	Seller does	Buyer does	Watch out for
FOB	Delivers to the named port, clears export	Books and pays main freight and insurance	The port must be named, e.g. FOB Shenzhen
CIF	Pays freight and insurance to the destination port	Pays destination charges and inland	Seller chooses the forwarder; insurance cover may be minimal
DDP	Delivers to your door, duties paid	Nothing until delivery	The most expensive per kg; duty calculation can be opaque

Where the money hides

Destination handling, THC and documentation fees on LCL — often more than the ocean freight.
Insurance: CIF typically covers 110% of invoice value at minimum cover, not all risks.
Duty and VAT: DDP includes them, so the unit price looks higher than the FOB price for the same fabric.
Currency and payment fees, which sit outside the Incoterm entirely.

Which one for a first order

FOB with your own forwarder. You see the freight, the insurance and the destination charges as separate lines, which makes the second order easier to negotiate. CIF is fine once you trust the supplier and the forwarder they use.

DDP is convenient for small, repeat orders where the duty rate is clear. It is a poor choice for a first container, because you cannot see what you are paying for.

FAQ

Does FOB include loading?

It includes delivery to the port and loading on board. It does not include the ocean freight or insurance.

Is CIF insurance enough?

Usually the minimum cover, not all risks. If the cargo value matters, buy your own policy.

Can I mix terms?

No. Pick one per shipment and write it into the purchase order with the named port or place.