Incoterms for CNC Parts: EXW vs FOB vs DAP vs DDP

Shipping

Incoterms decide who books the freight, who clears customs and who carries the risk. The cheapest-looking term is rarely the cheapest landed cost.

Key takeaways

  • EXW looks cheapest but leaves you with collection, export and import.
  • FOB is the standard when you have a forwarder; DDP is the simplest first order.
  • DDP must state the duty rate, VAT/GST and the delivery address.
  • Air is 3–6 business days; sea is 25–35 days — the Incoterm changes who arranges it, not the transit time.
  • Compare landed cost, not the part price.

The responsibility matrix

TermExport clearanceMain freightInsuranceImport dutyDelivered to
EXWBuyerBuyerBuyerBuyerYour forwarder at our shop
FOBSellerBuyerBuyerBuyerNamed port (Shenzhen/Yantian)
DAPSellerSellerSellerBuyerYour address, duty unpaid
DDPSellerSellerSellerSellerYour address, duty paid

A worked example: 20 kg prototype

Illustrative numbers for a 20 kg crate, $1,200 part value, air freight. They show why the term changes the number.

LineEXWFOBDDP
Part price$1,100$1,200$1,480
Pickup / export$40includedincluded
Air freight$180$180included
Insurance$15$15included
Duty at 7.5%$90$90included
Brokerage$60$60included
Landed total$1,485$1,545$1,480

Illustrative only. Freight, duty and brokerage vary by country, weight and address.

The DDP total can be similar to EXW/FOB once you add the admin. The difference is who carries the paperwork — and whether the number is fixed before you order.

Air vs sea

ModeTypical transitBest forWatch
Express air3–6 business daysPrototypes, small batches, urgent sparesVolumetric weight; remote address fees
Air freight5–8 days50–300 kgAirport handling; customs clearance
Sea LCL25–35 days500 kg+, non-urgentPort congestion; consolidation delays
Sea FCL25–35 daysFull containerSailing schedule; destination charges

DDP caveats to put in writing

  • Duty rate. The quote should state the rate assumed for your country and HS code.
  • VAT/GST. Say whether it is included; in some countries it is recoverable, in others it is a real cost.
  • Tariff changes. If the rate changes before shipment, the difference should be shown before you approve.
  • Remote address. Some carriers add a remote-area surcharge; confirm the delivery postcode.
  • What is excluded. Unloading, inside delivery, temporary import or special clearance.

Documents that should travel with the parts

Commercial invoice, packing list, HS code, material certificates and the inspection report. A certificate of origin is available on request. If your customs broker needs a specific declaration, tell us before the shipment is booked.

How to compare a DDP quote with a local one

Add the part price, freight, duty, brokerage, inspection and your time. A local quote already includes most of those; a Chinese FOB quote does not. DDP is the only line that compares cleanly.

Shipping and Incoterms · Payment terms · CNC machining China

Questions buyers ask

FAQ

Which Incoterm should I use for a first order?

DDP is usually the least surprising: freight, duty and brokerage are in the price. Use FOB if you have a forwarder and want control.

Who pays duty under DDP?

The seller arranges and pays import duty and brokerage; the cost is built into the quote. Confirm the duty rate and what is included in writing.

Is EXW cheaper?

The part price looks lower, but you arrange collection, export, freight and import. For a first order, the admin usually costs more than the saving.

Do tariffs change the DDP price?

They can. A DDP quote should state the duty rate assumed. If the rate changes before shipment, the difference should be shown before you approve.

What documents ship with the parts?

Commercial invoice, packing list, HS code, material certificates and the inspection report. A certificate of origin is available on request.

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