EXW, FOB and DDP describe different delivery, cost and risk arrangements. They are not interchangeable price labels, and the practical choice depends on the product, transport plan, destination and which party can carry out the required formalities.
Start with what Incoterms rules do and do not decide
Incoterms® 2020 rules help buyers and sellers identify the agreed delivery point, allocation of transport-related costs and the point at which risk transfers. They do not replace a product specification, payment agreement, quality agreement, insurance decision or written sales contract.
Write the chosen term together with the named place or port and the version of the rules. A phrase such as “FOB China” is not precise enough on its own. The relevant location and responsibilities need to be clear before a price can be compared.
EXW: goods made available at the named place
Under EXW, the seller makes the goods available to the buyer at the agreed named place, often the seller’s premises. The buyer takes on the transport chain from that point, including loading, export formalities where applicable, international freight, import procedures and onward delivery.
This can give an experienced buyer more control over the logistics plan, but it also creates more coordination work. If a buyer cannot practically handle export formalities in the seller’s country, the parties should clarify whether a different arrangement such as FCA is more suitable rather than assuming EXW covers export handling.
- Exact collection location and collection time
- Who loads the collecting vehicle
- Who completes export formalities
- Which party arranges every transport leg after collection
FOB: delivery on board at the named port of shipment
FOB is a rule for sea or inland-waterway transport. Under FOB, the seller delivers when the goods are on board the vessel at the named port of shipment, and the seller handles export formalities. Risk transfers at that on-board delivery point.
For a practical comparison, identify the named port, the agreed shipment timing and what information the buyer or freight provider must provide about the vessel. FOB does not make the destination freight, insurance, import clearance or final delivery disappear; those should be recorded separately in the transport plan.
DDP: delivery at destination with import formalities handled by the seller
Under DDP, the seller delivers the goods cleared for import at the named destination, on the arriving means of transport and ready for unloading. The seller carries the greatest set of transport and customs responsibilities among the Incoterms® rules, including export, transit and import formalities and applicable duties and taxes.
DDP can appear simple to a first-time buyer, but it requires a workable import arrangement in the destination country. Confirm who can lawfully complete the import process, what destination point is named and how unloading is handled. The buyer takes the unloading risk, while the carriage contract determines whether unloading charges are included.
Use a shipping comparison sheet before choosing a term
Compare the same product, quantity and destination under each option. Keep a separate line for the product price, origin charges, freight, insurance if relevant, customs and taxes, destination charges, unloading and final delivery. Do not compare an EXW product-only figure with a DDP delivered figure as if they cover the same scope.
For your sourcing brief, record the destination country, preferred delivery point, target timing and whether you already have a freight provider or importer arrangement. China Sourcing Team reviews product projects from US$1,000, subject to scope review; a submitted brief is not a shipping quotation or import-compliance confirmation.
Ready to organize a product?
Use the China sourcing request form for one item, review the completed sourcing brief example, or read about the guided Chrome helper for a multi-product project. Sourcing support starts from US$1,000 and is subject to scope review.