Summary

DDP, FOB, and EXW are common shipping terms used in international trade. These Incoterms define who pays for shipping, who handles customs clearance, and where responsibility transfers from seller to buyer.

Understanding these shipping terms helps businesses avoid unexpected costs and shipping risks.

What Are Shipping Terms?

In international trade, shipping terms explain how goods move from seller to buyer.

They clarify:

• who arranges transportation
• who pays freight costs
• who handles export or import customs
• when responsibility transfers

Three of the most common shipping terms are EXW, FOB, and DDP.

EXW (Ex Works)

EXW means the seller makes the goods available at their factory or warehouse.

The buyer handles almost everything else.

The buyer is responsible for:

• pickup from the factory
• export customs clearance
• international freight
• import duties and taxes

EXW is often used when buyers have their own freight forwarder in China.

FOB (Free On Board)

FOB is one of the most widely used shipping terms.

The seller handles:

• export customs clearance
• delivery to the port
• loading goods onto the vessel

Once the goods are on the ship, responsibility transfers to the buyer.

The buyer then manages:

• sea freight
• insurance
• import customs clearance

FOB offers a balanced responsibility between buyer and seller.

DDP (Delivered Duty Paid)

DDP is the most convenient option for many buyers.

The seller handles almost the entire process.

This includes:

• international shipping
• export clearance
• import clearance
• duties and taxes
• final delivery

The buyer simply receives the goods.

However, DDP pricing is usually higher because the supplier includes all logistics costs.

Why Understanding Shipping Terms Matters

Incorrect understanding of shipping terms can lead to unexpected fees or delays.

Businesses that import products should always confirm Incoterms before placing an order.

This ensures clear responsibility for transportation, customs, and delivery.

If you want to learn more about global sourcing and logistics, you can explore more guides about international trade and shipping processes.

FAQ

What are shipping terms in international trade?

Shipping terms are Incoterms that define shipping responsibility, cost allocation, and risk transfer between buyers and sellers.

Which shipping term is best for beginners?

DDP is often easier for beginners because the supplier manages shipping and customs.

Is FOB commonly used in international trade?

Yes. FOB is one of the most widely used shipping terms for sea freight shipments. But not very widely in the small shipments.

When should EXW be used?

EXW is suitable when the buyer has strong logistics partners and wants full control of shipping.