Incoterms for Manufactured Parts: EXW vs FOB vs DDP
Two quotes, two Incoterms, and the cheaper one lands more expensive. What EXW, FOB and DDP actually mean for who pays freight, customs and duty - and how to compare landed cost honestly.
Two suppliers quote your part. One says “$8.00 EXW,” the other “$9.20 DDP.” The first looks cheaper — until the freight forwarder, the customs broker, and the import duty all send their invoices and the “$8.00” part lands at $11. The price you compare is meaningless until you know the Incoterm attached to it.
Incoterms are the three-letter codes that define exactly where the seller's responsibility ends and yours begins — who pays freight, who clears customs, who eats the risk if a crate falls off the truck. For anyone buying parts across a border, this is the difference between the price you were quoted and the price you actually pay.
The three you'll actually meet
There are eleven Incoterms. For buying machined or molded parts, 90% of quotes use one of three:
| Term | Seller covers | You cover | Best when… |
|---|---|---|---|
| EXW (Ex Works) | Almost nothing — part is ready at their dock | Everything: pickup, export, freight, import, duty, delivery | You have your own forwarder and want maximum control |
| FOB (Free On Board) | Export clearance + getting goods onto the ship | Sea freight, insurance, import clearance, duty, final delivery | The common middle ground for ocean freight |
| DDP (Delivered Duty Paid) | Everything — to your door, duties paid | Nothing but unloading | You want one number and zero logistics hassle |
Why EXW looks cheap and often isn't
An EXW price is the bare part price — nothing else. It's the lowest number on the page, which is exactly why inexperienced buyers gravitate to it and then get surprised. On top of EXW you'll pay export handling, freight, insurance, your country's import duty, customs brokerage, and last-mile delivery. On small orders those fixed costs can rival the part cost itself. EXW only makes sense if you (or your forwarder) genuinely know how to move freight internationally.
Why DDP is the easy button — with a catch
DDP is the closest thing to “parts show up at my dock, done.” The seller handles the whole chain and quotes you one all-in number. Great for simplicity and for comparing apples to apples. The catch: the duty is baked in and invisible, so you can't see whether you're being charged the right tariff rate, and a seller who misclassifies your goods to win the order can create a compliance headache that's your problem later. DDP is fantastic for low-volume and prototype orders where your time is worth more than squeezing the freight.
The honest comparison trick
Never compare two quotes with different Incoterms. Get both suppliers on the same term, or build a quick landed-cost line for each:
Landed cost = part price + freight + insurance + duty + brokerage + last-mile
That's the only number that matters. A part that's 15% more expensive EXW can easily be cheaper landed if it ships lighter or clears a lower tariff. This is the same “look past the unit price” logic we push in how to read a CNC quote.
A few field notes
- Risk transfers with the term, not the payment. Under EXW and FOB, once the goods hit the named point, damage in transit is on you. Insure accordingly.
- Air vs sea changes the math. Small, urgent, high-value parts often go air (faster, pricier); bulk production goes sea. Your Incoterm should match the mode — FOB is an ocean term, FCA is its cleaner equivalent for air/courier.
- Duty depends on the part's classification (HS code), not the supplier. Know your HS code before you compare DDP quotes.
- Lead time hides in customs too. Clearance can add days. We break down where the calendar really goes in CNC lead times explained.
What we recommend
For prototypes and first orders, take DDP — one number, parts at your door, no logistics learning curve while you're still validating the supplier. Once you're running steady production and the volumes justify it, move to FOB (or FCA for courier) and run your own freight to shave cost. We quote all three; tell us your destination and whether you'd rather optimize for simplicity or for landed cost, and we'll lay out the real numbers. For the bigger picture on buying overseas safely, see global sourcing, or just send your part for a quote and ask for it landed to your city.
Related capabilities
Have a part to make?
Upload your CAD for a detailed quote and free DFM feedback within 24 hours.
