Incoterms: EXW, FOB, DAP, DDP — which one to ask for
Incoterms are three-letter codes defining where cost and risk pass from seller to buyer. Under EXW the buyer takes on everything; under DDP the seller delivers with duty paid. The codes between them shift responsibility in stages. Before comparing two quotes, check which code each was given under.
Four common codes
Why price comparison breaks here
A price quoted EXW and a price quoted DDP do not describe the same thing. The gap between them can equal freight, insurance, clearance and import duty combined. To compare two quotes, both have to be restated under the same code.
Cost and risk are separate
The code says not only who pays, but who bears the loss if goods are damaged. In some codes the transfer of cost and the transfer of risk do not happen at the same point, which matters when insurance is discussed.
Practical advice for a smaller buyer
If importing is not familiar territory, asking for DAP or DDP simplifies the process. If you work with a customs broker, FOB or EXW is usually cheaper, because you move the goods on your own rates.
Documents move with the code
The code also determines who prepares which documents. An invoice and packing list are always needed; responsibility for the certificate of origin, insurance policy and export declaration shifts with the term.
Frequently asked
- Which edition of Incoterms applies?
- Incoterms 2020 is current. The contract should state the edition year, because some definitions changed between editions.
- Is DDP possible everywhere?
- Not always. Some countries require a foreign seller to register as importer, which is not practical in every market.
Last updated: 2026-09-13