International Trade Terms

International textile trade operates on a foundation of standardized terminology that governs how goods move from mill to buyer, how payment flows between parties, and what documentation proves ownership and compliance. Mastering these terms is essential for any buyer sourcing fabric across borders.

Shipping Terms (Incoterms)

The International Chamber of Commerce publishes Incoterms to define exactly when risk and cost transfer from seller to buyer. For textile shipments, four terms dominate.

FOB (Free On Board) is the workhorse of textile exports. The seller delivers fabric onto the vessel at the named port—say, FOB Ningbo or FOB Shanghai—and from that moment, the buyer owns the risk. Most experienced importers prefer FOB because it lets them control shipping costs through their own freight contracts and consolidate shipments from multiple suppliers.

CIF (Cost, Insurance & Freight) bundles the goods, ocean freight, and marine insurance into a single price delivered to the destination port. While this simplifies budgeting, buyers should understand that risk still transfers at the origin port, not the destination. CIF works well for buyers who want a landed cost without managing shipping logistics.

EXW (Ex Works) places minimum responsibility on the seller—goods are simply made available at the factory gate. In practice, EXW creates complications for foreign buyers who cannot easily handle export clearance in China, making FCA (Free Carrier) a more practical alternative when buyers want maximum control.

DDP (Delivered Duty Paid) represents the opposite extreme, where the seller handles everything including import duties and delivery to the buyer's door. This term suits sample shipments and small orders where buyers lack import experience.

Payment Security

Letters of Credit remain the gold standard for securing international textile transactions. A bank guarantee protects both parties: the seller knows payment is assured once documents comply, while the buyer knows funds release only when shipment is proven. For first-time trading relationships or large orders, LC provides essential security despite its administrative overhead.

Essential Documentation

Every international textile shipment requires a document chain that proves what was shipped, where it came from, and who owns it.

The Bill of Lading serves triple duty as receipt, carriage contract, and title document. Whoever holds the original B/L can claim the goods—making it the most critical document in the shipment.

HS Codes classify textiles for customs purposes and determine duty rates. The difference between HS 5407 (synthetic filament wovens) and HS 5512 (synthetic staple wovens) can significantly affect landed costs.

The Certificate of Origin proves where goods were manufactured, which matters both for customs clearance and for qualifying under preferential trade agreements like RCEP or various bilateral FTAs.

The Commercial Invoice and Packing List work together to detail what was sold and how it was packed. For LC payments, these documents must match the credit terms exactly—even minor discrepancies can delay payment.

Container Shipping

FCL versus LCL shipping represents a fundamental choice. Full container loads (FCL) offer direct routing and better protection but require enough volume to justify the fixed cost. Less-than-container loads (LCL) let smaller shipments share space, though consolidation adds transit time and handling. For fabric shipments, the break-even typically falls around 12-15 cubic meters.

Order Planning and Sourcing

Successful international sourcing requires understanding the commercial realities of textile manufacturing.

MOQ (Minimum Order Quantity) represents the smallest quantity a supplier will accept for a single order. These thresholds exist because textile production involves significant fixed costs—machines require minimum runs, raw materials come in bulk, and processes like dyeing demand setup time regardless of order size. MOQs vary by product type: greige fabric may start at 3,000-5,000 meters, while custom weaves might require 5,000-10,000 meters.

Lead time encompasses the total duration from order confirmation to delivery. A typical textile order passes through order processing, material sourcing, sample approval, production, and shipping—each phase adding days or weeks. Stock fabric might ship in 3-7 days, while custom weaves can require 45-60 days. Experienced buyers build buffer time into their planning and maintain ongoing communication with suppliers.

Mill-direct sourcing bypasses trading companies and agents to purchase directly from the manufacturing facility. This approach typically saves 10-30% by eliminating middleman markups and enables better quality control through direct communication with production teams. However, mills generally require higher MOQs than trading companies, and buyers need sufficient technical knowledge to manage specifications and quality independently.