Incoterms explained for Nigerian importers

When a supplier quotes you a price, the most important word in the quote is often the three-letter code next to it. Incoterms define exactly where the supplier's responsibility ends and yours begins: who pays for what, and who carries the risk at each stage. Misunderstand the term and a "cheap" quote turns expensive at the port. Here are the ones that matter for buying from China.

EXW: ex works

The supplier makes the goods available at their own factory door. That is it. From that point, every cost and risk is yours: getting the goods to the port, export clearance in China, freight, insurance, and the Nigerian leg.

EXW gives you the lowest sticker price and the most work. It only makes sense if you have a strong forwarder in China who can collect from the factory and handle Chinese export formalities. For most importers, EXW looks cheaper than it really is.

FOB: free on board

The supplier delivers the goods, cleared for export, onto the vessel at a named Chinese port. From there, freight and everything after is your responsibility, usually arranged through your forwarder.

FOB is the workhorse term for importing from China and the one most experienced buyers ask for. It bundles the messy China-side inland transport and export clearance into the supplier's price, where they handle it efficiently, while leaving you in control of the freight and the Nigerian leg, where you want control.

If you remember one term, remember FOB. It is the cleanest split of responsibility for most China to Nigeria orders.

CIF: cost, insurance and freight

The supplier arranges and pays for freight and insurance to your destination port. It looks convenient, and for a first-timer it can be. The catch is that you lose control of the freight choice, and suppliers sometimes pad the freight margin or use a carrier that dumps you with high destination charges. If you take CIF, confirm exactly which charges land on you at the Nigerian end.

DDP: delivered duty paid

The supplier, or more often an agent, delivers the goods all the way to your door with everything paid, including Nigerian duty. This is the "I just want a box at my warehouse" option, common with small consolidated electronics shipments.

DDP is simple but opaque. You cannot see the duty, the freight or the margin separately, and you are trusting the agent's customs handling. It can be fine for small parcels and risky for large value, because if the customs declaration is wrong, the problem is still ultimately yours.

Which term to ask for

• You have a good forwarder and want the best landed cost: ask for FOB.
• You are doing your very first small order and want simplicity: CIF can be acceptable, but check destination charges.
• You want a no-thinking door delivery on small goods and trust the agent: DDP.
• You have full China-side logistics capability: EXW, otherwise avoid it.

The term does not change how you pay the supplier

Whatever Incoterm you agree, the goods still have to be paid for in RMB. The Incoterm decides what the price covers. The payment mechanism is separate.

So agree your term, confirm precisely what the quoted price includes, and when it is time to pay, you can make a request to settle the supplier on Alipay from Naira at a locked rate. Knowing your Incoterms means you will never again confuse a low EXW price with a low landed cost.