Incoterms for Australian Importers, Explained

Two quotes for the same product can look very different once you factor in what each price actually includes. A low unit price quoted EXW (Ex Works) means you are responsible for arranging and paying for everything from the factory door onward, export customs, inland trucking, ocean freight, insurance, Australian customs clearance and delivery. A higher price quoted DDP (Delivered Duty Paid) may already include most of that.

Comparing supplier quotes without normalising for Incoterms is one of the most common ways importers underestimate landed cost.

EXW (Ex Works): the supplier makes goods available at their premises; you arrange and pay for everything else, including export clearance in the origin country. It gives you the most control but the most administrative load.

FOB (Free On Board): the supplier delivers the goods to the origin port and handles export clearance; you take over cost and risk once goods are loaded on the vessel. This is the most common term for sea freight from Asia and generally strikes a reasonable balance of control and simplicity.

CIF (Cost, Insurance and Freight): the supplier arranges and pays for ocean freight and marine insurance to the destination port, but risk still transfers to you once goods are loaded at origin. You then handle import clearance and delivery.

DDP (Delivered Duty Paid): the supplier is responsible for everything, including Australian import duty and GST, up to an agreed delivery point. It's the simplest for a buyer with no import experience, but you lose visibility over freight and duty costs, which are folded into the price.

There is no universally 'best' Incoterm, it depends on how much of the logistics chain you want to control directly versus hand to the supplier. FOB is a common default for importers who want a broker and forwarder managing the Australian side of the shipment, since it keeps freight and customs costs transparent and separately negotiable rather than bundled into the product price.

Whatever term you use, get it written into the purchase order or contract explicitly, including the named place (e.g. 'FOB Shanghai'), and confirm which version of the Incoterms rules (they're periodically updated) both parties are working from.