EXW vs FOB vs DAP vs DDP: What Each Term Means (2026)

EXW means the seller’s job ends at their factory gate. FOB means it ends once the goods are loaded at the port of departure. DAP means the seller delivers to a named place but leaves duty to the buyer. DDP means the seller delivers with duty paid. The real difference is not vocabulary — it is who pays, whose risk it is, and who is legally the importer.

These terms surface in every China sourcing negotiation, usually because both sides are arguing about price. Price is the smaller part of the story: the term decides where the handover happens, and everything after it becomes yours to organise, fund and risk.

Where Responsibility Changes Hands

Read the four terms as a ladder, each step moving the handover closer to your door:

• EXW (Ex Works). Goods are made available at the seller’s premises. Nothing beyond that is their concern.
• FOB (Free On Board). The seller delivers to the departure port and loads the goods on the vessel.
• DAP (Delivered at Place). The seller delivers to a named destination, ready for unloading — but import clearance and duty stay with the buyer.
• DDP (Delivered Duty Paid). Delivery to the destination with duty settled. One number, one accountable party.

Four questions decide what you are buying, whatever the label says: who books freight, who clears export, who clears import, who pays duty.

EXW: The Lowest Quote and the Most Work

EXW prices the goods at the factory door. Everything physical — trucking in China, export documents, port handling, booking, freight, entry, duty, delivery — sits with the buyer.

Sellers like it because risk stops at their loading dock. For a US buyer it only works if you already have a China-side operation that picks up, documents and consolidates reliably; otherwise the saving on the invoice is smaller than the cost of assembling the chain yourself.

FOB: The Term Most Chinese Suppliers Default To

FOB sits where goods cross the ship’s rail, and it has become the Chinese export default because it is comfortable for sellers: they handle local transport and export clearance, and their responsibility ends at loading.

For buyers, FOB gives real control: you choose the forwarder and the routing. It also places everything from the vessel onward on your side — carriage, insurance decisions, US entry, duty and delivery. DDP vs FOB covers what that handover means for cost and control.

The classic FOB mistake is treating the negotiated freight rate as the total. Duty, entry and delivery are not in that number — and those are the parts that move.

DAP: The Seller Carries the Freight, You Carry the Duty

DAP moves the handover much closer to you: the seller arranges the international leg and delivers to a named place.

What it leaves out is import clearance and duty. Freight rates are comparatively predictable; duty treatment for China-origin goods has changed repeatedly. Under DAP the volatile cost stays on your side, and you still need your own customs arrangement.

The trap is assuming DAP is almost DDP. Without a clearance plan and an importer of record in place, cargo can arrive and simply sit there. DDP vs DAP vs LDP sets out who does what at the border.

DDP: One Number, One Owner, One Set of Fine Print

DDP is the only one of the four where a single party answers for the whole route, with duty settled along the way. For a buyer without customs capacity, it removes the most administration and the most surprise.

It also carries the most fine print, and one question outranks the others: whose name is on the customs entry as importer of record? A duty-paid price does not change the legal fact that someone must be the importer, and CBP has been tightening scrutiny of importer identity data through 2026. The IOR accuracy enforcement shows why a mismatch there can stop cargo outright.

When comparing DDP quotes, three things belong on the table: what is included, what is excluded, and who absorbs exam, storage and detention costs. What DDP shipping includes is the list to hold against any quote.

The Trade-Offs, Side by Side

None of the four is inherently good or bad. They distribute four things differently, and the right choice depends on which you can genuinely manage.

• Cost visibility. EXW and FOB show a low invoice price and hide the real total; DAP shows more; DDP the most, if the quote is itemised.
• Who absorbs duty volatility. Under EXW, FOB and DAP it is you; under DDP the other side. That is why DDP quotes are harder to compare year to year.
• Control of routing and schedule. FOB gives the buyer the most; DDP trades it away for simplicity; EXW hands you control you may not want.
• Administration and legal exposure. EXW, FOB and DAP all require you to be a functioning importer; DDP reduces the workload, though not the question of who is the importer.

The Seller’s Side: Why Suppliers Push EXW and FOB

Seeing the other side of the table makes negotiations less confusing. Most Chinese suppliers prefer EXW or FOB for reasons that have little to do with you: risk ends early, no foreign duty exposure, no need to register as an importer abroad, and a quoted price that looks more competitive than it will prove to be.

Nothing dishonest in that — it is their cost structure talking. Exporters also know US duty treatment for China-origin goods keeps shifting, and a company with no US presence has little appetite for a cost it cannot forecast.

The consequence: the term on the quote is often not the term you should buy. If your supplier insists on EXW or FOB, price the missing stages separately so the comparison becomes apples to apples.

Choosing Without Regret

Three questions usually settle it. How much of the route can you genuinely manage — is there someone who can handle US entry, bond and delivery? How volatile is duty for your product, and who can better absorb it? How much of your time and cash should be tied up in freight rather than product?

Whichever term you end up with, the ground rules are identical: get the scope in writing line by line, confirm who files the entry and in whose name, and know what happens if the container is examined. Those answers matter more than which four letters appear on the invoice.

Frequently Asked Questions

What is the difference between EXW and FOB?

The handover point. Under EXW, the seller’s responsibility ends at their premises and the buyer arranges everything from pickup onward, including export clearance. Under FOB, the seller delivers to the departure port and loads the goods on the vessel.

Which is better for a first-time importer, FOB or DDP?

DDP, if the alternative is handling US entry, duty and delivery for the first time. FOB gives more control and often a lower invoice, but transfers customs work and arrival risk to you at the moment you are least equipped for them.

Under DAP, who pays the import duty?

The buyer. DAP covers delivery to a named place ready for unloading; clearance and duty stay with the buyer.

Can a Chinese supplier be the importer of record on a DDP shipment to the US?

Duty-paid service settles the charges, but an entry still needs a legally valid importer of record. Whether that is your company or a party arranged by the seller is worth confirming in writing, given CBP’s tightened scrutiny of importer data.

Does the Incoterm change my total cost, or just who pays?

Both. The physical cost of moving goods is broadly similar whoever arranges it, but scope, risk allocation and the margin for carrying risk change the total — which is why EXW, FOB and DDP quotes for one shipment rarely line up.