FOB vs EXW vs DDP for Appliance Imports
Updated 2026-11-09
EXW puts every cost and risk after the factory gate on you. FOB puts the goods on board the vessel at the named port, so you pay ocean freight, insurance and import clearance. DDP means the seller delivers to your door with import duty paid, which sounds simple but usually makes the supplier the importer of record. For appliances, FOB is the most common middle ground; DDP is convenient and structurally risky.
FOB vs EXW vs DDP for Appliance Imports
FOB vs EXW vs DDP decides three things before a single unit is produced: who pays for each leg, where risk transfers, and who is the importer on paper. The third one is the one that costs money two years later.
Importers usually pick a term by comparing quotes. That is backwards. Pick the term by deciding how much of the import you want to control, then compare quotes on the same term.
Quick comparison table
| Item | EXW | FOB | DDP |
|---|---|---|---|
| Seller delivers | At factory premises | On board vessel, named port | At your address, duty paid |
| Export clearance | Buyer | Seller | Seller |
| Main carriage | Buyer | Buyer | Seller |
| Insurance | Buyer | Buyer (usually) | Seller |
| Import clearance and duty | Buyer | Buyer | Seller |
| Risk passes | At the factory | When goods are on board | At destination, before unloading |
| Importer of record | Buyer | Buyer | Often the seller or its agent |
| Visibility of duty paid | Full | Full | Low |
| Typical use | Buyer with own China operations | Container imports | Samples, parcels, turnkey retail |
What each rule really allocates
EXW is the minimum obligation on the seller: make the goods available at the named place. Everything after that gate — export declaration, inland trucking, port handling, loading — is the buyer’s. For a European or American importer buying from a Chinese factory, that means arranging work in a country where you have no staff. In practice most “EXW” quotes get quietly converted into FOB by the time the goods move.
FOB puts the goods on board the vessel the buyer nominated, at the named port. The seller handles export clearance and loading; the buyer handles ocean freight, insurance, destination charges and the import entry. Risk passes when the goods are on board, which is a clean, observable moment — worth having when a container is damaged or short-landed.
DDP moves almost everything to the seller, including import clearance and duty. It reads like a door-to-door service and prices like one. The trap is structural: to clear goods on import, someone must be the importer of record. If that someone is the seller or a nominee, the customs relationship, the classification decision and the duty payment sit outside your books.
The DDP problem in detail
Three things go wrong with DDP on appliance imports.
- You lose the duty data. Your landed cost model assumes a duty rate. Under DDP you may never see the entry, so you cannot verify the rate applied, the customs value declared or whether any preference was claimed. When your retail price is built on a duty assumption you cannot check, the margin risk is yours and the information is not.
- The importer identity gets blurred. Market surveillance and customs both want to know who placed the product on the market. A DDP structure that hides the importer behind a freight forwarder’s VAT number creates a problem the first time a product is queried.
- Compliance does not transfer. Product safety duties follow the act of placing goods on the market. A delivery term can move cost and risk; it cannot move your obligations as the brand owner, and it does not create the EU economic operator the General Product Safety Regulation requires.
DDP is not automatically wrong. It is wrong when it is chosen to avoid understanding the import. Samples, spare parts and small promotional parcels are genuinely easier DDP. Container programmes rarely are.
Reading a quote correctly
A supplier quote usually states a term and a price, and nothing else. Before comparing, normalise:
- Port. FOB Ningbo is not the same as FOB Shenzhen for a buyer shipping to Hamburg; inland costs and sailing schedules differ.
- Volume basis. A quote at one container size is not comparable to another. Compare per unit at the same loading.
- What is included in “local charges”. Origin THC, documentation, telex release and customs brokerage are often quoted separately after the order.
- Insurance. Under FOB it is yours. Cargo insurance is cheap relative to the loss it covers; do not skip it to protect a margin.
- Duty and VAT. These are destination costs, never part of the FOB price. Any “all-in” number that omits them is not a landed cost.
Our guide to customs documents for appliances lists the paperwork that has to line up with the term you choose.
A cost build-up that survives audit
Build the landed cost in layers, and keep the layers separate in your file:
| Layer | What it contains | Who owns it under FOB |
|---|---|---|
| Product | EXW price, packaging, tooling amortisation | Seller |
| Origin charges | Inland, export declaration, THC, docs | Seller (usually) |
| Main carriage | Ocean freight, BAF, security fees | Buyer |
| Cargo insurance | All-risk cover on invoice value plus freight | Buyer |
| Destination | THC, handling, delivery order, broker | Buyer |
| Duty | Rate per CN or HTS code, preference applied | Buyer |
| VAT or sales tax | Recoverable or not depending on your status | Buyer |
| Last mile | Port to warehouse, unloading | Buyer |
Two practical rules: never let the freight forwarder be the only party who knows the duty rate, and never let a DDP price stand in for this table.
Note on prices: product reference prices on this site are indicative FOB ranges. They move with quantity, configuration, raw material and exchange rates, and they exclude freight, duty and taxes.
Where each term fits an appliance programme
- First container, new supplier: FOB with your own forwarder. You learn the route, the charges and the broker relationship while the volumes are small.
- Repeat container, established route: FOB or FCA depending on who books the space. FCA has become more common for buyers with contracted carrier rates.
- Samples and spare parts: DDP is often the cheapest way to avoid a broker fee on a small shipment, provided the seller discloses the entry.
- Retail-ready programmes with a 3PL: DAP into the 3PL, with your own import entry. You keep the duty data and the compliance file.
A term is not a quality signal. A supplier who explains the allocation clearly, names the port and gives you the loading data is easier to work with than one who offers a suspiciously simple delivered price.
How to choose
- Decide who is the importer. If the answer is you — and for a brand programme it should be — avoid any term that puts that role elsewhere.
- Price the risk you are taking. EXW and FOB transfer risk early; price insurance and inspection accordingly.
- Match the term to your capability. No staff in China, no broker relationship, no customs knowledge: FOB with a forwarder who handles origin and destination is the shortest path to control.
- Write the term into the contract, with the named place. “FOB” alone is incomplete; “FOB Ningbo” is a term.
Questions to put in your RFQ
- Term and named place, spelled out, with the port or address.
- What is included in local charges at origin, itemised.
- Who books the space, and can we nominate our own forwarder?
- DDP only: who is the importer of record, and will you provide the customs entry and duty receipt?
- Loading data per container size, for the exact configuration quoted.
- Insurance: who arranges it, at what cover, and what is the claims route?
Next steps
Tell us the destination, the volume and whether you want to hold the import entry yourself, and we will quote on the term that fits rather than the term that looks cheapest. Start at the contact page. Related: landed cost for kitchen appliances and LCL vs FCL for small appliances.
Frequently asked questions
Why is EXW a bad fit for most appliance imports?
Because it leaves export clearance to you. Under EXW the seller only makes the goods available at its premises; you must handle export declaration, inland haulage, port charges and loading. A Chinese factory can usually do those steps faster and cheaper than a foreign buyer can arrange them remotely, so EXW often costs more than it saves and adds risk before the goods even leave the country.
Does FOB include freight?
No. Under FOB the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment, and risk passes at that point. Ocean freight, insurance, destination charges and import clearance are yours. The seller typically covers export clearance and loading, which is the practical reason FOB is the default for container shipments.
What is the real problem with DDP?
DDP makes the seller responsible for import clearance and duty, which in many EU and UK cases means the seller, or an entity it appoints, becomes the importer of record. That entity then holds the customs relationship and often the product compliance file. You lose visibility of the duty actually paid, the classification used and the importer identity on record — and market surveillance will look for that identity.
Can DDP still make sense?
Yes, for samples, small parcel shipments and one-off promotional orders where the administrative cost of being the importer outweighs the benefit. It also works when the seller uses a legitimate DDP structure with a disclosed importer of record and provides the entry documents. Ask for those documents before you agree; a seller who cannot produce them is selling you an undeclared risk.
Which term should a first-time importer use?
FOB, with a forwarder you appoint. It keeps you in control of routing, insurance and the customs entry, and it makes the landed cost calculation honest. Move to DAP only when you have a reliable customs broker and want the seller to handle delivery to your warehouse; keep the import entry in your own name.
Does the Incoterm change who is liable for product safety?
No. Product compliance follows the act of placing goods on the market, not the delivery term. A DDP arrangement does not transfer your obligations as the brand owner, and it does not remove the need for an economic operator responsible for the product in the EU. It only changes who talks to customs.
How do I compare quotes on different terms?
Rebuild every quote to the same baseline. Add inland haulage, export charges, ocean freight, insurance, destination charges, duty, VAT and broker fees to the EXW or FOB price, then compare the door-delivered total per unit at the same volume. A lower FOB with a weak routing can lose to a higher FOB with a direct service.