FOB, EXW, DDP, DAP: Incoterms Explained for Importers (Without the Lawyer Voice)

Incoterms decide who pays what, who owns the risk at every mile, and who eats the loss when something goes sideways. Pick the wrong one and every problem on your lane becomes a jurisdictional argument. Here are the four you'll actually encounter, in importer-plain language.

EXW — Ex Works: the trap of control

The seller's price covers the goods at their factory gate. You nominally 'control' everything — which means you handle export clearance, a Chinese-language inland logistics puzzle, and risk from the moment the goods leave the production line. EXW suits importers with boots on the ground in China; for everyone else it's a discount that costs more than it saves.

FOB — Free On Board: the wholesale default

The seller delivers onto the vessel at the Chinese port and handles export clearance. You own the freight and everything after. FOB is the workhorse for importers with their own forwarder and destination broker — transparent ocean rates on your side, seller's cost visibility on theirs.

• •Watch: the named port matters — 'FOB Shenzhen' means your freight starts there, not at the factory
• •Watch: 'local charges at destination' are yours — get them from your broker before the container sails, not after

DAP — Delivered At Place: nearly everything

Seller delivers to your named place, import clearance excluded: you handle duties and import formalities. Useful when you have VAT structures or duty programs at destination that a seller-side clearance would disturb.

DDP — Delivered Duty Paid: the cleanest, if priced honestly

Seller handles everything including duties, to your warehouse door. One price, one accountable party. The catch is the same one everywhere in this business: some DDP quotes are cheap because declarations are creative. Ask for the clearance paperwork on a reference shipment before you trust the number.

The two that cause most disputes

• •FOB with vague named places — 'FOB China' is not a term; the port is the term
• •DDP without documentation — an undocumented DDP is a loan against your importer record at rates you didn't agree to

Our recommendation pattern

Established importer with broker: FOB, consistently named, consistently documented. No broker or want one accountable price: DDP with a partner who shows the paperwork. Either way — we quote both structures so you can see the actual difference for your program, not the theoretical one.