Sourcing guide · Shipping
Incoterms explained for buyers: EXW, FOB, CIF, DDP
This Incoterms explainer for buyers cuts through the jargon: three letters on a quote decide who pays for what and where risk transfers. Learn the four terms you will actually encounter — EXW, FOB, CIF, DDP — and you will stop comparing quotes that were never comparable.
The four terms you’ll actually use
| Term | Risk transfers… | Seller pays | Buyer handles |
|---|---|---|---|
| EXW Ex Works | Transfers at the seller’s premises — once goods leave the stall/factory gate, risk is yours. | Makes goods available for pickup. Nothing else. | Export clearance, all freight, insurance, import clearance, duties. |
| FOB Free On Board | Transfers when goods are loaded on board the vessel at the named port. | Export clearance + delivering goods to the port and onto the ship. | Ocean freight, insurance, import clearance, duties. |
| CIF Cost, Insurance & Freight | Transfers at loading like FOB — even though the seller pays freight and insurance. | Export clearance + contracts and pays for ocean freight and minimum insurance to your port. | Import clearance, duties, onward transport from the port. |
| DDP Delivered Duty Paid | Stays with the seller until goods reach your named destination, duties paid. | Everything: export, freight, insurance, import clearance, duties. | Unload the goods. That is about it. |
What each term looks like in Guangzhou
EXW · Ex Works
The default Guangzhou stall quote: you pay at the stall and arrange your own pickup.
FOB · Free On Board
The classic sea-freight term — you (or your forwarder) control the main shipping leg.
CIF · Cost, Insurance & Freight
Common when a factory quotes "to your port" — compare their freight cost against your own forwarder.
DDP · Delivered Duty Paid
What many sourcing agents effectively offer — door-to-door, no surprises, highest all-in price.
The stall-quote trap
A stall quotes you ¥25/piece and a factory quotes ¥32/piece DDP. Which is cheaper? You cannot know until both quotes share a term. Guangzhou stall prices are typicallyEXW — goods ready at the stall, everything else on you. Before comparing any two quotes, ask each supplier: "Which Incoterm is this price based on?"Then run both through our freelanded cost calculatorto compare true per-unit cost, not sticker price.
Frequently asked questions
Which Incoterm is cheapest for a beginner?+
There is no universally cheapest term — it depends on your freight options. FOB is the most common starting point for sea freight because you control the main shipping leg and can compare forwarder quotes. DDP looks simplest but usually carries the highest all-in price. Compare total landed cost, not just the unit price, using a landed cost calculator.
What does a Guangzhou wholesale stall price include?+
Typically EXW — the price covers the goods ready for pickup at the stall, nothing more. Export clearance, freight, insurance, and import duties are all on you (or your agent). Always ask the stall: "Is this price EXW, or does it include anything else?"
DDP vs DAP — what is the difference?+
Both are "delivered" terms, but DDP (Delivered Duty Paid) includes import duties and taxes paid by the seller, while DAP (Delivered At Place) leaves duties and import clearance to you. For a buyer, DDP is the true door-to-door, no-surprises quote — and usually the most expensive one.
Confused by a quote’s shipping terms?
Forward us the quote — we’ll decode the Incoterm, flag what’s missing, and estimate your true landed cost before you commit.
Get a quote review →Keep exploring:guide hub·payment safety·master playbook·landed cost calculator