From EXW to DDP — how they apply in everyday shipments.
Incoterms are the backbone of international trade. Mastering five of them — EXW, FOB, CIF, DAP, and DDP — gives you control in most negotiations. This guide explains each term with real examples and the checks to run before you sign.
EXW — Ex Works
What it means: the seller makes goods available at their premises; buyer covers export, freight, insurance, and inland transport.
Example: buying components from a Chinese factory — buyer handles pick-up, export clearance and international freight.
Check: if you lack logistics capacity in origin, EXW can cause hidden costs.
FOB — Free On Board
What it means: seller places goods on board the vessel at the named port of shipment; buyer takes risk from that point.
Example: exporting soy from Paraguay — seller handles delivery and loading to the ship.
Check: specify the exact port and who arranges stowage.
CIF — Cost, Insurance & Freight
What it means: seller pays freight and minimal insurance to the destination port; risk passes when goods are onboard.
Example: buying equipment from Europe — seller arranges sea freight and a basic insurance cover to destination port.
Check: review insurance coverage and exclusions.
DAP — Delivered at Place
What it means: seller delivers ready for unloading at the agreed place; buyer handles import clearance.
Example: receiving goods at your warehouse; buyer is responsible for import customs.
DDP — Delivered Duty Paid
What it means: seller assumes all costs and obligations including customs duties at destination.
Example: machinery delivered and cleared at buyer’s door, duties paid.
Check: seller must be familiar with destination country regulations.
Quick comparison
• EXW: max responsibility for buyer.
• FOB: seller responsible until shipboard.
• CIF: seller pays freight & basic insurance.
• DAP: seller delivers to place; buyer handles import.
• DDP: seller covers everything to destination.
Understanding these five Incoterms will simplify negotiations and reduce surprises. Always specify location, Incoterms version (e.g., 2020), and who bears insurance.
👉 Want us to review your trade terms before signing? Contact us — we’ll help.
#Incoterms #InternationalTrade #ImportExport #Megaglobal #MegaglobalBlog #Megaglobal #Blog #InternationalLogistics #CargoTransport #MaritimeTransport #AirTransport #LandTransport #CustomsManagement
