Most disputes between importers, suppliers and forwarders on China–Middle East and China–Africa trade come back to one question: who was supposed to pay for this, and who carried the risk when it happened? Incoterms® rules answer that question, if they are used correctly. This guide explains the 2020 rules for buyers in the UAE, Iraq, the GCC and Africa. The rules are published by the International Chamber of Commerce (ICC); this page is general information, not legal advice.
Incoterms® 2020 are standard trade terms published by the ICC that divide delivery, risk, costs and customs formalities between seller and buyer in a sales contract.
They came into force on 1 January 2020 and remain the edition most contracts use. Each rule answers four questions: where the seller delivers, when risk passes, who pays which costs, and who handles export and import clearance. They do not decide the price, payment terms, when ownership passes, or what happens if the contract is broken; your sales contract and payment terms (for example a letter of credit) cover those.
There are eleven rules: seven can be used for any mode of transport, and four are only for sea and inland waterway transport.
| Rule | Full name | Mode | Where the seller delivers and risk passes |
|---|---|---|---|
| EXW | Ex Works | Any | Goods made available at the seller's premises, not loaded |
| FCA | Free Carrier | Any | Handed to the buyer's carrier at the named place (loaded, if at the seller's premises) |
| CPT | Carriage Paid To | Any | Handed to the first carrier; seller pays carriage to the named destination |
| CIP | Carriage and Insurance Paid To | Any | As CPT, plus insurance at Institute Cargo Clauses (A) level |
| DAP | Delivered at Place | Any | At the named destination, ready for unloading |
| DPU | Delivered at Place Unloaded | Any | Unloaded at the named destination (replaced DAT in 2020) |
| DDP | Delivered Duty Paid | Any | At the named destination, cleared for import with duties paid |
| FAS | Free Alongside Ship | Sea | Alongside the vessel at the port of loading |
| FOB | Free On Board | Sea | On board the vessel at the port of loading |
| CFR | Cost and Freight | Sea | On board at the port of loading; seller pays freight to the destination port |
| CIF | Cost, Insurance and Freight | Sea | As CFR, plus minimum insurance (Institute Cargo Clauses C) |
The further down the list from EXW to DDP, the more the seller pays and organises; this matrix shows the main cost and customs steps.
| Step | EXW | FCA | FOB | CFR / CIF | CPT / CIP | DAP | DPU | DDP |
|---|---|---|---|---|---|---|---|---|
| Export clearance | Buyer | Seller | Seller | Seller | Seller | Seller | Seller | Seller |
| Loading at origin and port handling to vessel | Buyer | Buyer after handover | Seller | Seller | Seller | Seller | Seller | Seller |
| Main carriage (ocean freight) | Buyer | Buyer | Buyer | Seller | Seller | Seller | Seller | Seller |
| Insurance obligation | None | None | None | Seller under CIF (Clauses C) | Seller under CIP (Clauses A) | None | None | None |
| Destination port handling before onward delivery | Buyer | Buyer | Buyer | Buyer, unless in seller's carriage contract | Buyer, unless in seller's carriage contract | Seller | Seller | Seller |
| Unloading at the named place | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller | Buyer |
| Import clearance, duty and taxes | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Seller |
| Risk passes to buyer | At seller's premises | At handover to carrier | On board at loading port | On board at loading port | At handover to first carrier | At named place | After unloading | At named place |
“None” for insurance means there is no obligation in the rule; the party carrying the risk usually insures it anyway. Exactly how terminal handling charges are split also depends on the carrier's tariff and what the seller's contract of carriage includes, so put it in writing.
If you have a forwarder you trust and can import in your own name, buying FOB or FCA gives you control of freight, routing and destination charges; CIF and DDP hand that control to the seller and its agents.
| Rule | When it suits you | What to watch |
|---|---|---|
| EXW | You have a strong agent in China who can handle export | The buyer is responsible for Chinese export clearance, which a foreign buyer often cannot do itself; FCA is usually the better choice |
| FCA / FOB | Most importers with their own forwarder | Name the place precisely; for containers, risk under FOB passes only when the box is on board, while the seller handed it over at the terminal earlier |
| CFR / CIF | Buyers without their own forwarder | The seller chooses the carrier; low freight may be recovered through destination charges; CIF insurance is minimum cover |
| CPT / CIP | Seller arranges multimodal transport, for example sea plus truck | Risk passes at the first carrier, long before arrival |
| DAP / DPU | Seller manages transport to your warehouse | You still clear customs and pay duty and VAT |
| DDP | Small buyers without import registration | Ask who the importer of record is; see our DDP vs DAP guide |
Because the seller pays the freight but the buyer carries the risk from loading and usually pays destination charges, which can be high when the seller chose the cheapest freight.
Three things go wrong most often:
Write the three-letter rule, the most precise named place you can, and “Incoterms® 2020”, and use exactly the same wording on every document.
The same rule and place should appear on the proforma invoice, the commercial invoice, the letter of credit if you use one, and your quote request. In Iraq this consistency matters even more: the pre-declaration asks for the Incoterm, and since 10 July 2026 invoices must be verified electronically before a declaration is processed (Deloitte).
In the UAE duty is calculated on the CIF value, so if you buy FOB or EXW, the freight and insurance to the UAE are added to the invoice value when customs assesses duty.
UAE customs duty is generally 5% of the CIF value, collected through Dubai Customs or the relevant emirate's customs, and 5% import VAT applies, administered by the Federal Tax Authority. Keep your freight invoice and insurance certificate with the shipment documents, because they support the declared value. Other destinations use their own valuation rules: Iraq calculates duty per item by HS code and may value goods from its own reference values, and East African countries follow the EAC customs rules.
We record the Incoterm and named place on every quote request and case, and the cost sheet shows which party pays each line under that rule.
That lets you compare, for example, a CIF offer from your supplier with buying FOB and using our freight, on a like-for-like basis. Try our Incoterms tool to see who pays what for your own route.
Parties can still agree to use Incoterms 2010 if the contract says so, but Incoterms® 2020 is the current edition and the safest default. Always state which version applies.
FOB is only for sea and inland waterway transport and passes risk when the goods are on board. FCA works for any mode and passes risk when the goods are handed to the buyer's carrier, which suits containers delivered to a terminal.
Not automatically. The seller pays freight to the destination port, but unloading and destination terminal costs are the buyer's unless they are included in the seller's contract of carriage.
For most importers with their own forwarder, FOB or FCA at the Chinese port gives control over freight and destination costs. Smaller buyers sometimes prefer DAP. There is no single best rule; it depends on your licence, volume and experience.
No. Incoterms cover delivery, risk, costs and clearance. Ownership and payment are set by the sales contract and the payment terms, such as a letter of credit.
Delivered at Place Unloaded. It replaced DAT in 2020 and is the only Incoterms rule under which the seller must unload the goods at the destination.
Official and primary sources used for this page. Rules change, so check the source for the latest version.
This guide is general information, not legal, tax or customs advice. Rules and rates change; confirm the requirements for your shipment with your coordinator or the relevant authority.
One Dubai-based team that plans, books and coordinates your shipment from the supplier's door to yours, across sea, road and customs, with one named coordinator.
Full-container sea freight from China to the UAE, Iraq and the GCC, with one named coordinator, an itemised quote and every stage in your case file.
We prepare and check your customs documents, estimate duties by HS code and coordinate licensed customs brokers at origin and destination, with every step visible in your case file.
Ship smaller volumes by sea in a shared container from China to Dubai, and consolidate goods from several suppliers in Jebel Ali for the UAE, Iraq, the GCC or East Africa.
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FCL and LCL sea freight from Shanghai, Ningbo, Shenzhen, Qingdao and other Chinese ports to Dubai, with 2026 routing via Khor Fakkan, Fujairah or Sohar and bonded trucking to Jebel Ali.
Incoterms
Under DAP the seller delivers to the named place and the buyer pays import clearance, duties and taxes. Under DDP the seller pays all of that as well and carries the risk until delivery. Many “DDP all-in” offers from China are really DAP: duty, VAT or destination charges are billed on arrival. Ask who the importer of record is and which costs are written into the price.
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Next step
Send your route and cargo. A coordinator checks the documents and charges for your shipment and replies with an itemised quote.
Incoterms® 2020 are eleven ICC rules that decide where the seller delivers, when risk passes to the buyer and who pays each cost and customs step. For importers in the GCC, Iraq and Africa buying from China, FOB or FCA usually gives the most control over freight, CIF is common but leaves destination costs open, and DAP or DDP shift the work to the seller. Always name the exact place and the version.
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FCL and LCL sea freight and re-export from Jebel Ali and JAFZA to Mombasa, with Kenyan documents such as the IDF and KEBS certificate checked before loading, and onward transit on the Northern Corridor where we can cover it.
