Incoterms 2020 are ICC rules that say who pays for freight, insurance and customs and where risk passes from seller to buyer. Most Bangladeshi apparel is quoted FOB Chattogram: the factory delivers goods on board, and you book and pay main freight. CIF includes freight and insurance; DDP delivers cleared and duty-paid.
What are Incoterms, and why do they matter for a clothing order?
Incoterms are standard three-letter trade terms published by the International Chamber of Commerce. The current edition is Incoterms 2020. A term answers three questions for a sale: who arranges and pays for transport, where risk of loss or damage passes from seller to buyer, and who is responsible for export and import clearance. They do not decide when title to the goods transfers, and they do not govern payment terms or the consequences of breach. Those belong in the sales contract.
For apparel, the term matters because two quotes are only comparable if they use the same one. A $3.20 FOB offer and a $3.55 CIF offer from the same factory can be identical in real cost.
Which Incoterms are used for clothing from Bangladesh?
| Term | Seller delivers | Buyer pays for | Risk passes |
|---|---|---|---|
| EXW (Ex Works) | At the factory gate, uncleared for export | Everything from the factory, including export clearance | At the factory |
| FCA (Free Carrier) | To the carrier or a named place, cleared for export | Main freight, insurance, import clearance and duty | When goods are handed to the carrier |
| FOB (Free On Board) | On board the vessel at the named port, cleared for export | Main freight, insurance, import clearance and duty | When goods are on board |
| CFR / CIF | To the destination port; CIF adds minimum marine insurance | Unloading, import clearance, duty and inland delivery | When goods are on board (not at destination) |
| DDP (Delivered Duty Paid) | To the named place, cleared for import with duty paid | Unloading (if not included in the price) | At the named destination |
In Bangladesh, FOB Chattogram is the default for knit and woven programmes sold to brands that run their own logistics, so you will see it in most price lists. Chattogram is the main seaport for garment exports. CIF and DDP appear when a buyer has no forwarder or wants a single price delivered.
Should you use FOB or FCA for container shipments?
FOB is designed for goods placed on board the vessel by the seller. Most garments, however, travel in containers that are handed to a terminal or carrier before the ship is loaded, and the ICC’s guidance notes say that for containerised goods FCA is the better fit, because risk passes when goods are handed to the carrier rather than when they are loaded. In practice FOB is still dominant in Bangladesh, because factories, forwarders and banks are used to it. If you use FOB for containers, be explicit in the contract about who is responsible for the goods between the terminal gate and loading.
What do CIF and DDP change for a small buyer?
Under CIF the seller books the ship and buys insurance to your port, which suits buyers without a forwarder. Note two limits. The seller’s duty is only minimum cover (Institute Cargo Clauses (C)) unless you agree more, and risk still passes at loading, so you carry the risk during the voyage. Import clearance, duty and delivery from the port are yours.
Under DDP the seller is responsible for the whole journey including import clearance and duty in your country. That sounds simple, but a factory is rarely registered as an importer in your market, so DDP usually means a buying house or forwarder quotes and arranges it. It also means the price includes duty, which changes if the tariff changes. Compare landed costs rather than headline prices.
Which term should you choose for a first order?
- You have a forwarder and import experience: FOB (or FCA) Chattogram. You keep control of freight cost and timing.
- You have no forwarder but can clear imports: CIF to your nearest port. The price includes freight and insurance, so you can see the full cost.
- You want one price to your door: DDP via a buying house or forwarder. Check who is the importer of record and how duty changes are handled.
- Very small parcels and samples: express courier terms, typically with the buyer’s account number or prepaid by the supplier.
Whatever you choose, write the term with the named place and the edition in the purchase order, for example “FOB Chattogram, Incoterms 2020”. Our landed-cost calculator converts an FOB price to a landed cost for your destination.
KEY NUMBERS
- Current Incoterms editionSource: International Chamber of Commerce · as of Oct 1, 2026
- Incoterms 2020
- Terms for sea and inland waterway onlySource: ICC Incoterms 2020 · as of Oct 1, 2026
- FOB, CFR, CIF (and FAS)
- Minimum insurance under CIFSource: ICC Incoterms 2020, CIF A5 · as of Oct 1, 2026
- Institute Cargo Clauses (C)
KEY NUMBERS · SOURCES LISTED BELOW · CITE THIS
Frequently asked questions
What does FOB Chattogram mean?
The seller delivers goods on board the vessel at Chattogram port, cleared for export. From that point you carry cost and risk: main freight, insurance, import clearance and duty.
Is FOB or CIF cheaper?
The headline price is lower under FOB because freight and insurance are not included. The real cost can be the same or lower under FOB if you buy freight better than the seller would, or higher if you do not.
Who pays import duty under CIF?
The buyer. CIF covers freight and minimum insurance to the destination port, not import clearance or duty.
Does DDP mean no surprises on duty?
It means the seller bears duty, but the price will reflect it, and the contract should say who bears changes in tariff or classification disputes. Agree that before shipping.
Can I switch Incoterms between orders?
Yes. Many buyers start with CIF or DDP for a first order and move to FOB once they have a forwarder. Re-quote on the new basis; do not simply add or subtract a flat amount.
Sources
- International Chamber of Commerce: Incoterms 2020 · Sep 10, 2019