Incoterms 2020 cheatsheet for aluminum buyers

FOB (Free On Board) means the Chinese mill's responsibility ends when the cargo is loaded on the vessel at origin port; the buyer pays ocean freight, insurance, destination port fees, import customs, and inland delivery. DAP (Delivered at Place) means the mill (or its forwarder) handles everything up to your nominated destination, except import customs clearance and duty. For aluminum buyers without their own forwarder, DAP is safer; for buyers with established forwarders, FOB is usually 8-15% cheaper net.

With FOB, the Chinese mill pays to load the container on the ship at the origin port; the buyer takes risk and cost from that moment. With CIF, the mill also pays for ocean freight and basic insurance to the destination port. Most Chinese mills quote FOB Shanghai by default — CIF quotes are often 3-5% higher.

With DDP, the Chinese seller takes on destination customs + duty risk — which they often price conservatively (markup) to cover unknowns. FOB lets experienced importers use their own freight forwarder, which is typically 8-15% cheaper net.

If you have a trusted local customs broker, FOB gives you the best cost control. If you don't, DAP (Delivered at Place) is safer — the seller handles everything except import clearance, which your broker handles. Avoid DDP unless the seller is experienced in your destination country's customs regime.

The main changes: (1) DAT was renamed DPU (Delivered at Place Unloaded) to clarify that the seller unloads at any agreed destination, not just a terminal; (2) CIP insurance coverage was upgraded from ICC C (minimum) to ICC A (all-risks), while CIF still uses ICC C; (3) FCA now allows the bill of lading to be issued after loading, simplifying letter-of-credit transactions; (4) security and customs-clearance allocations were clarified.