Incoterms decide where cost and risk move between buyer and seller. They do not decide who owns the goods, how payment works, or which law applies, and they are not a substitute for the delivery clause in the contract.
For steel structures the choice also interacts with packing: containerised shipments usually ship FOB or CIF, while break-bulk, open-top and flat-rack cargo needs a conversation about terminal handling and lifting before the term is agreed.
Who does what, in one table
| Term | Export clearance | Main carriage | Insurance | Import clearance | Typical use for steel |
|---|---|---|---|---|---|
| EXW | Buyer | Buyer | Buyer | Buyer | Rarely practical; the buyer has no presence at the Chinese works |
| FOB (named Chinese port) | Seller | Buyer | Buyer | Buyer | Very common; buyer controls the forwarder and the freight rate |
| CFR (named destination port) | Seller | Seller | Buyer | Buyer | Used when the buyer wants a delivered-to-port price without insurance |
| CIF (named destination port) | Seller | Seller | Seller (minimum cover) | Buyer | Common for first shipments; check the insurance cover level |
| DAP (named place) | Seller | Seller | Seller's choice | Buyer | Used when the buyer can clear customs but wants delivery to site |
| DDP (named place) | Seller | Seller | Seller | Seller | Uncommon: the seller would need to be registered for import tax in the destination country |
Costs that are often missed
- Inland transport from the factory to the port, and any special equipment for long members.
- Terminal handling charges at origin, which are not the same as the ocean freight.
- Destination terminal handling, documentation fees and port storage.
- Import duty and VAT, which under DAP remain with the buyer.
- Lifting equipment at both ends for open-top or flat-rack cargo.
- Demurrage and detention if unloading is slower than the free time allowed.
How the term interacts with packing
Under FOB and CIF the sea voyage risk sits with the buyer at different points, so the packing specification matters more, not less. A CIF quotation with minimum insurance cover may not be enough for a high-value consignment.
- State the packing and marking requirement separately from the Incoterm, whichever term is used.
- For flat-rack or break-bulk cargo, agree who provides the lifting equipment and who pays the lift.
- Agree what happens if a container is rejected at the terminal because a member exceeds the door opening.
- Decide in advance who handles any repair coating required after loading damage.
What to write into the contract
- The Incoterm, the named place and the year of the Incoterms rules.
- The packing, marking and container-loading requirement.
- The document set: commercial invoice, packing list, bill of lading, mill certificates, certificate of origin.
- The payment schedule and the event that triggers each payment.
- The inspection and acceptance arrangement before shipment release.
- Which party handles import clearance, duty and unloading at destination.
This guide describes general practice for steel structure projects. It is not a design, and it does not replace the specification or the engineer responsible for your project.