FOB / CIF / DDP for Silicone Imports — Incoterms 2020 Cheat Sheet
May 2026
TL;DR
Incoterms 2020 define the legal allocation of cost, risk, and responsibility between seller and buyer in international shipments. For silicone procurement from China, the choice of Incoterms (FOB, CIF, CFR, DDP, EXW, FCA, etc.) materially affects total landed cost, customs handling complexity, and risk exposure. This guide covers the practical implications for silicone-specific shipments.
Quick Comparison
| Incoterm | Buyer Responsibilities | Seller Responsibilities | Typical Use Case |
|---|---|---|---|
| EXW (Ex Works) | Everything from supplier's gate | Goods at supplier's gate | Low buyer experience; supplier handles export |
| FCA (Free Carrier) | Onward shipping | Export clearance + delivery to first carrier | Medium buyer experience |
| FOB (Free On Board) | Sea freight + insurance | Export clearance + loading on vessel | Standard for China-export silicone |
| CFR (Cost and Freight) | Insurance + import clearance | FOB + sea freight | Buyer wants visibility on freight |
| CIF (Cost, Insurance, Freight) | Import clearance + delivery | All except final delivery | Less common for silicone |
| DDP (Delivered Duty Paid) | Receive at facility | All shipping, customs, duties | Highest seller risk; premium pricing |
FOB Shanghai (or FOB Ningbo / Qingdao)
Most common Incoterm for China-supplied silicone. Buyer:
- Books ocean freight (or coordinates with freight forwarder)
- Holds insurance
- Manages destination customs
- Pays origin port handling charges only
Pros for buyer: Maximum control over freight cost (can shop ocean rates); insurance choice; customs control.
Cons: Higher coordination effort; risk during transit (insurance covers but disruption matters).
CIF (Less Common for Silicone)
Buyer pays for everything except origin loading; seller arranges sea freight and insurance. Risk transfer at port of loading.
When to use: First-time importer who wants minimal seller engagement; small-volume specialty silicones where freight cost is small percentage of total.
DDP (Premium for Convenience)
Seller arranges everything to your facility door. Includes customs clearance and import duties at destination.
Pros for buyer: Simplest possible procurement; no customs hassle; predictable landed cost.
Cons: 5-15% pricing premium over FOB; supplier owns import compliance; if supplier botches paperwork, your shipment is held by customs.
Considerations for silicone DDP:
- Specify the importer of record (IOR) — usually the seller, but buyer should verify
- Confirm the seller has experience with destination country regulations (e.g., REACH for EU, RoHS for US)
- Verify chemical-specific declarations are accurate (CAS numbers, HS codes)
Practical Selection Rules
For most international silicone procurement:
| Buyer Profile | Recommended Incoterm |
|---|---|
| Experienced buyer, multiple shipments per year | FOB Shanghai |
| New buyer, infrequent purchases | DDP (premium pricing acceptable) |
| Small-quantity sample / pilot order | DDP or CIF (efficiency over cost) |
| Project-based, large-volume contract | FOB with full freight & customs management |
| Multi-country buyer (EU, NA, APAC) | FOB and centralize customs at headquarters |
Insurance Considerations
For all Incoterms, marine cargo insurance is recommended:
- Container damage from typhoons, capsizing, fire
- Theft or pilferage during transit
- Customs delays (limited cover)
- Hull collision
Typical insurance cost: 0.05-0.15% of cargo value. Specialty silicone may have higher rates due to chemical hazard classification.
Customs and HS Code
For chemicals, the HS (Harmonized System) code determines:
- Import duty rate
- Document requirements
- Inspection probability
- Trade-policy applicability (anti-dumping, countervailing duties)
Common silicone HS codes (consult your country's customs for exact):
- 3910.00.00: Silicones in primary forms
- 3824.99.96: Other chemical mixtures (catch-all)
- 2931.90.50: Silicon-containing organic compounds
Misclassification can result in penalties; consult a customs broker for accurate HS coding.
Demurrage and Detention
If your shipment sits at port too long, you incur:
- Demurrage: charge by port for shipping container occupying terminal yard
- Detention: charge by carrier for shipping container being held away from terminal
Free time periods vary by port (typically 4-7 days demurrage, 5-10 days detention). Beyond free time, charges accrue at $50-200 per container per day.
Mitigation: Pre-arrange import customs clearance; have customs broker on standby; don't ship during peak holiday seasons (Christmas, Lunar New Year).
Related Reading
Air vs ocean freight for silicone for shipping mode selection. MSDS / SDS for silicon chemicals for compliance documentation. Sample-to-PO timeline for end-to-end procurement timing.