Incoterms Explained: FOB vs. EXW vs. DDP for First-Time Importers

EXW (Ex Works): the factory's responsibility ends at their front door - you or your sourcing agent arrange and pay for everything from pickup at the factory onward: trucking to port, export customs, ocean freight, import customs, and final delivery.

EXW quotes the lowest price on paper, but carries the highest coordination burden - you're responsible for every leg of the journey and every point of failure.

FOB (Free On Board): the factory handles getting the goods to the port and clearing them for export, loaded onto the vessel - you take over from there, covering ocean freight, import customs, and destination delivery.

FOB is the most common term for import sourcing because it splits responsibility at a clean, verifiable point: the ship's rail. Both sides know exactly where their obligation starts and ends.

DDP (Delivered Duty Paid): the seller handles everything, including import customs and duties, delivering all the way to your door.

DDP quotes the highest price but is the simplest for the buyer - though it means trusting the seller to handle your country's customs process correctly, which is a real risk if they're inexperienced with your destination market.

Which term makes sense depends on your experience level: first-time importers often prefer DDP for simplicity, while sellers running recurring shipments usually move to FOB once they have a freight forwarder, since it's cheaper and gives more control over the shipping leg.

We typically recommend FOB for clients working with us, since we handle the freight forwarding, customs clearance, and delivery on the buyer's side anyway - so you get FOB pricing with DDP-level simplicity.