Incoterms are the ICC's rules defining responsibilities between seller and buyer in international transactions. Choosing the wrong term doesn't void a contract — but it can leave you paying costs you never anticipated, or surrender control of your shipment to the buyer's nominated forwarder.
The terms Vietnamese exporters meet most
- EXW (Ex Works): the buyer handles everything from the factory gate. Sounds easy for the seller but works against you — you can't control when cargo moves, and proving export for VAT refund becomes harder.
- FOB (Free On Board): the seller's duty ends when goods pass the ship's rail at the Vietnamese port. The most common term for Vietnamese exports — the buyer books the vessel through their forwarder.
- CIF (Cost, Insurance & Freight): the seller pays freight and insurance to the destination port, but risk still transfers at origin. Many sellers get this point wrong.
- DAP/DDP (Delivered At Place / Duty Paid): the seller delivers to door; DDP additionally carries destination import duties. Only accept with a solid partner in the import country.
FOB or CIF — which sells better?
Selling FOB is simple but hands transport control to the buyer: their forwarder sets the schedule, and any Vietnam-side delay is still blamed on the seller. Selling CIF/CFR lets you choose the vessel, pool volume for better rates, and price freight into your sale. For sellers with steady volume, migrating from FOB to CIF typically improves margin and reduces deadline risk.
Three things to spell out in any contract, whatever the term
- The exact risk-transfer point (named port, named warehouse) — never vague wording.
- Who files customs at each end, and who pays specialized inspection fees if they arise.
- DEM/DET free time at destination, and who pays container detention beyond it.
Before signing a trade contract with an unfamiliar term, you can send it to Homexim for a quick review — the route desk will point out exactly which costs and risks sit on your side under Incoterms 2020.