EXW vs FOB vs CIF vs DDU: Complete Guide for Importers
International shipping terms like EXW, FOB, CIF, and DDU are essential in global trade. These rules—known as Incoterms (International Commercial Terms)—define who pays for shipping, who handles customs, and when risk transfers between buyer and seller.
Choosing the wrong term can lead to unexpected costs, delays, and disputes, especially when importing from China.
In this guide by BRF SHIPPING, we explain each term in simple language and help you choose the right one.
What Are Incoterms and Why They Matter
Incoterms are standardized trade rules published by the International Chamber of Commerce (ICC). They clarify:
- Who pays for transportation
- Who handles export/import customs
- When risk transfers
- Who buys insurance
Even a small difference (e.g., EXW vs CIF) can result in thousands of dollars difference in total cost.
1. What Is EXW (Ex Works)?
EXW = Seller has minimum responsibility
Under EXW, the seller only prepares the goods at their factory or warehouse.
Responsibilities
- Seller: Pack goods and make them available
- Buyer: EVERYTHING else
Buyer Handles
- Pickup from factory
- Export customs clearance
- Freight booking
- Insurance
- Import clearance & delivery
Risk Transfer
???? At the seller’s premises
Best For
- Experienced importers
- Buyers with freight forwarders in China
⚠️ Key Insight: EXW looks cheap but often becomes the most complex and risky option.
2. What Is FOB (Free On Board)?
FOB = Most commonly used shipping term
Under FOB, the seller delivers goods to the port and loads them onto the vessel.
Responsibilities
- Seller: Inland transport + export customs + loading
- Buyer: Ocean freight + insurance + import
Risk Transfer
When goods are loaded onto the ship
Best For
- Importers who want cost control
- Buyers with shipping agents
FOB offers a balanced solution between cost and control.
3. What Is CIF (Cost, Insurance, and Freight)?
CIF = Seller pays shipping + insurance
The seller covers the cost of freight and insurance to the destination port.
Responsibilities
- Seller: Export + freight + insurance
- Buyer: Import customs + delivery
Risk Transfer
Still transfers at origin port (when loaded on vessel)
Best For
- Beginners
- Buyers without freight experience
Important: Even though seller pays shipping, risk still transfers early, which many buyers misunderstand.
4. What Is DDU (Delivered Duty Unpaid)?
DDU = Door delivery, but taxes unpaid
Under DDU (now largely replaced by DAP), the seller delivers goods to the buyer’s location, but does NOT pay import duties or taxes.
Responsibilities
- Seller: Transport to destination
- Buyer: Import clearance + duties + taxes
Risk Transfer
At delivery location
Best For
- Buyers who want door delivery
- But can handle customs locally
DDU is a middle ground between CIF and DDP.
EXW vs FOB vs CIF vs DDU: Key Differences
| Term | Delivery Point | Seller Responsibility | Buyer Responsibility | Risk Transfer | Best For |
|---|---|---|---|---|---|
| EXW | Factory | Minimal | Everything | At factory | Experts |
| FOB | Port (origin) | Export + loading | Freight onward | On vessel | Balanced control |
| CIF | Destination port | Freight + insurance | Import + delivery | On vessel | Beginners |
| DDU | Buyer’s location | Delivery (no duty) | Duties + customs | At destination | Semi-experienced |
How to Choose the Right Incoterm
If You Are the Buyer
- Want full control & lowest cost → EXW
- Have a forwarder → FOB (Recommended)
- New to importing → CIF
- Want door delivery → DDU / DDP
If You Are the Seller
- Minimize responsibility → EXW
- Standard export → FOB
- Earn freight margin → CIF
- Offer premium service → DDU/DDP
Real Example (China to USA)
- EXW Shenzhen → Buyer arranges everything
- FOB Shanghai → Supplier delivers to port
- CIF Los Angeles → Supplier pays freight
- DDU New York Warehouse → Delivered, but buyer pays tax
Common Mistakes to Avoid
❌ Choosing EXW without a China agent
❌ Thinking CIF includes destination fees
❌ Not clarifying customs responsibility
❌ Ignoring risk transfer point
Conclusion: Which Is Best?
There is no “best” Incoterm—only the one that fits your business:
- Best for control: FOB
- Best for simplicity: CIF / DDU
- Best for beginners: DDP (or DDU)
- Best for experts: EXW
For most importers, FOB remains the safest and most cost-effective choice.
FAQ (SEO Optimized)
1. What is the main difference between EXW and FOB?
EXW requires the buyer to handle everything, while FOB requires the seller to deliver goods to the port and load them onto the ship.
2. Is CIF better than FOB?
CIF is simpler but gives less control. FOB is better for cost optimization.
3. Is DDU the same as DDP?
No. DDU excludes duties and taxes, while DDP includes all costs.
4. Which Incoterm is cheapest?
EXW has the lowest upfront price but may have the highest total cost.
Need help choosing EXW, FOB, CIF, or DDU?
BRF SHIPPING provides door-to-door, FOB, and DDP solutions from China worldwide.
Contact us today for a free shipping quote and cost breakdown.
