A Guide to Common Incoterms When Importing Steel from China

A Guide to Common Incoterms When Importing Steel from China

Navigating international shipping requires a clear understanding of Incoterms®—the standardized trade terms that define the responsibilities of buyers and sellers. When importing steel from China, selecting the right Incoterm is crucial for managing costs, risks, and logistics. Here's a guide to the most common terms used in the steel trade.

Key Incoterms for Steel Importers:

FOB (Free On Board): This is the most common term for sea freight. The supplier (e.g., Ruixiang Steel) is responsible for delivering the goods and loading them onto the vessel you nominate at the port of origin. Risk transfers to the buyer once the goods are over the ship's rail. The buyer handles the main ocean freight, insurance, and all destination port costs.

CIF (Cost, Insurance, and Freight): The supplier arranges and pays for the goods, the main ocean freight, and the minimum insurance to the port of destination. While convenient, the buyer assumes risk once the goods are loaded onto the ship. The buyer is responsible for all costs and procedures at the destination port.

CFR (Cost and Freight): Similar to CIF, but the supplier does not procure the insurance. The supplier pays for the goods and the ocean freight to the destination port. The buyer is responsible for arranging insurance and all destination charges.

EXW (Ex Works): The buyer's responsibility is at its maximum. The buyer simply picks up the goods from the supplier's premises (factory or warehouse). The supplier's responsibility ends once the goods are made available. The buyer handles all subsequent costs and risks, including loading, inland transport in China, and export formalities.

Choosing the Right Term for Your Business:

Choose FOB if you want control over shipping and insurance and have experience in logistics.

Choose CIF/CFR for simplicity if you are a new importer and want the supplier to handle the main shipping.

Choose EXW only if you have a reliable agent in China to manage the entire inland and export process.

At Ruixiang Steel, we have extensive experience shipping under all major Incoterms. We work transparently with our international clients to ensure a smooth process, providing all necessary documentation and support for your steel import needs.