The four terms that matter
EXW, Ex Works. The seller makes the goods available at their premises. Everything after that is yours: Chinese inland transport, export clearance, loading, ocean freight, relay, import clearance, delivery. Maximum control, maximum exposure. First-time importers rarely appreciate that EXW makes them responsible for Chinese export customs formalities, which a foreign buyer without a Chinese entity cannot straightforwardly perform, so it gets done by an agent acting for you at a price you did not negotiate.
FOB, Free On Board. The seller delivers the goods on board the vessel at the named Chinese port and handles export clearance. Risk passes at that point. You arrange and pay for ocean freight onward. This is the workhorse term for Asian imports and, for most Caribbean importers, the right default.
CIF, Cost Insurance and Freight. The seller arranges and pays for carriage to the named destination port and takes out insurance, but risk still passes to you at the origin port when the goods are loaded. That mismatch between who bears risk and who chose the carrier is the term's defining weakness.
DDP, Delivered Duty Paid. The seller delivers to your door with everything paid, including import duty and destination consumption tax. Maximum convenience, and on Caribbean lanes frequently the most expensive option on the table.
Why the relay changes the calculus
On a lane where the cargo transships at Kingston, Caucedo, Manzanillo or Cartagena, the journey has a seam in the middle. Somebody has to make sure the box gets off the mainline vessel and onto the feeder. If the mainline and feeder carriage are separate bookings by separate parties, nobody's obligation covers that gap, and a missed connection costs roughly a week because the next feeder is a week out.
Read the terms against that seam:
- Under FOB, the relay is unambiguously yours. That is fine, provided you actually book a through-movement rather than just an ocean leg. An importer who buys FOB and books port-to-port to the hub has bought half a journey.
- Under CIF, the seller books the carriage but you carry the risk. If the connection is missed, the loss is yours and the booking decision that caused it was not.
- Under DDP, the relay is the seller's problem in full.
Stated plainly: FOB gives you control of the seam, CIF gives you the risk without the control, and DDP hands both to a party on the other side of the world.
The case against CIF
CIF is popular because it looks simple and the supplier's freight quote often appears cheap. Two mechanics make it worse than it looks.
The first is the risk-and-control mismatch above. You bear the risk from the origin port but the supplier chose the carrier, the routing and the relay. Their incentive is the cheapest booking that discharges their obligation, which is not the routing with the most reliable connection.
The second is the tax base. Most Caribbean territories compute duty and consumption tax on the CIF value, meaning freight and insurance sit inside the taxable amount. A supplier who inflates the freight component of a CIF price is inflating your duty and your VAT along with it. On an island charging 15% VAT and 20% duty, an inflated freight line is taxed at over a third on top of the inflation itself.
If you buy CIF, price the freight component separately and compare it against what you could book yourself.
The case against DDP on Caribbean lanes
DDP is genuinely convenient, and on high-volume China-to-United States or China-to-Europe lanes it can be priced competitively because suppliers move enough freight to have real destination capability.
On Caribbean lanes it usually is not, for a structural reason. The seller is quoting a landed price into a customs regime they do not operate in, through a broker relationship they do not have, in a territory where they cannot easily verify a classification or resolve a query. Rational behaviour is to add a wide risk margin. You pay that margin whether or not the risk materialises.
There is a second problem specific to this region: the importer of record. In most of these territories the entry has to be filed by a locally registered importer holding a local tax identification number. In the Dominican Republic that is an RNC. In Jamaica it is a TRN. In Trinidad it is a BIR number. In Panama it is a RUC. Puerto Rico, being inside the United States customs territory, needs a US importer of record with an EIN. A Chinese supplier offering DDP is offering to file an entry using somebody's registration, and whose it is, and what that party's liability looks like when a classification is challenged, is a question worth asking before the container sails.
And a third: DDP quotes routinely assume a preferential duty rate that Chinese-origin goods do not qualify for. DR-CAFTA relief in the Dominican Republic is US-origin only. CARICOM duty-free treatment applies to CARICOM-origin goods. Neither covers a container from Shenzhen. A DDP price built on the wrong rate turns into a surcharge at destination or a dispute, and either way it arrives after your goods do.
What to ask for
For most Caribbean importers, FOB at the named Chinese port, with a through-movement booked to the final port by one forwarder, is the right structure. It gives you:
- Control over the routing and therefore over the relay connection.
- A freight cost you can price competitively rather than inherit.
- A clean, defensible CIF value for customs, since you know exactly what freight and insurance actually cost.
- One party responsible from the container freight station in China to clearance at destination.
Take EXW only if you have a capable agent in China and a reason to control the inland leg. Take CIF only if you have priced the freight component and found it fair. Take DDP only if the supplier can name the importer of record, has shown they understand the destination duty regime, and the premium is one you would rather pay than manage.
How this connects to the rest of the lane
The Incoterm sets the boundary. Everything inside the boundary is the operational problem covered elsewhere: the relay structure in Caribbean transshipment hubs, the cost components you are taking responsibility for in China to Caribbean shipping cost, the destination tax rates that determine what a DDP quote should contain in Caribbean import duties and taxes, and the whole lane in shipping from China to the Caribbean. Where the destination registration requirement bites hardest, the per-country detail is in the individual guides such as the Dominican Republic, Jamaica and Panama.
Where you are buying FOB and need the through-movement booked as one, that is what LCL consolidation and full container load services exist to do.
Frequently Asked Questions
What does DDP shipping from China mean?
Delivered Duty Paid means the seller delivers the goods to your named destination with all costs paid, including ocean freight, import duty and destination consumption tax. It places the maximum obligation on the seller and the minimum on the buyer. On Caribbean lanes it is often the most expensive option, because the supplier is pricing a customs regime they do not operate in and adds a wide risk margin.
Is DDP a good idea for Caribbean imports from China?
Usually not, for three reasons. Chinese suppliers rarely have real broker relationships in these territories and price the uncertainty into the quote. Most of the region requires a locally registered importer of record with a local tax ID, so it is worth asking whose registration the entry will be filed under. And DDP quotes frequently assume preferential duty rates that Chinese-origin goods do not qualify for, which surfaces as a surcharge or a dispute after the goods arrive.
FOB or CIF for shipping from China?
FOB is generally better. Under CIF the seller books the carriage but risk still passes to you at the Chinese port, so you carry the consequences of a routing decision you did not make. CIF also inflates your tax base, since most Caribbean territories calculate duty and consumption tax on the CIF value, meaning any padding in the freight component is taxed as well.
Who is responsible for the transshipment connection?
It depends on the term and, more importantly, on how the carriage was booked. Under FOB the relay is the buyer's responsibility, which is manageable if a single through-movement to the final port was booked and dangerous if only the ocean leg to the hub was. Under CIF the seller books it but the buyer carries the risk. Under DDP it is entirely the seller's.
What is wrong with EXW for a first-time importer?
EXW makes the buyer responsible for Chinese export customs formalities, which a foreign buyer without a Chinese entity cannot straightforwardly perform. In practice an agent does it on your behalf at a price you did not negotiate, and you have also taken on the Chinese inland leg. Unless you have a capable agent in China and a specific reason to control that leg, FOB is the better default.
Which Incoterm should I use importing from China to the Caribbean?
FOB at the named Chinese port, combined with a through-movement booked to the final destination port by a single forwarder. That gives you control of the relay connection, a competitively priced freight cost, a defensible CIF value for customs, and one accountable party from the origin container freight station to clearance at destination.