What Are The Sourcing Terms DDP FOB And EXW Describe The Difference?

What is the difference between DDP and EXW?

As per Inco terms, DDP means, Delivered Duty Paid (up to the named destination mentioned).

Ex Works (EXW) means that the seller has the goods ready for collection at his premises at named destination mentioned on the date agreed up on mutually..

What does FOB stand for?

Free On Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.

What is the importance of Incoterms?

The use of Incoterms eliminates inconsistencies in language by giving all parties the same definition of specific terms within a trade agreement. As a result, the risk of problems during shipment is reduced since all parties clearly understand their responsibilities in performing trade under the given contract.

How is FOB calculated?

FOB Value = Ex-Factory Price + Other Costs (b) Other Costs in the calculation of the FOB value shall refer to the costs incurred in placing the goods in the ship for export, including but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees, service charges, et cetera.

What is the best incoterm for seller?

Best Incoterms for sellersCFR-CIF: Cost and Freight – Cost, Insurance and Freight. The CFR Incoterm and the CIF Incoterm are generally good options for the seller as they’re competitive and do not involve too many risks. … DDP-DAP: Delivered Duty Paid – Delivered at Place. … FOB: Freight on Board.

What is the difference between FOB and DDP?

The difference between FOB and DDP shipping terms is who is controlling the shipment. On FOB (Free On Board) shipping terms the buyer is responsible for the shipment from the goods being loaded onto the ship in the country of origin. … DDP is generally more expensive as there’s more risk for the seller.

Who pays freight on DDP?

Delivered duty paid (DDP) is a delivery agreement whereby the seller assumes all of the responsibility, risk, and costs associated with transporting goods until the buyer receives or transfers them at the destination port.

Where are Incoterms used?

The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from the differing interpretations of the rules in different countries.

Is DDP same as CIF?

What are the difference between DDP and CIF? As per Inco terms of shipping, DDP means Delivered Duty Paid (named destination mentioned). CIF means, Cost, Insurance and Freight (paid up to the destination mentioned).

What is better EXW or FOB?

FOB and Ex Works terms can both be used to ensure you know all of your costs from the start of the shipping process all the way up to receiving your goods. Ex Works terms leave all responsibility and risk in the hands of the buyer, whereas FOB terms split the responsibility down the middle.

What does FOB mean on Alibaba?

Freight on board, or free on board (FOB): freight on board means that the exporter delivers the goods at the specified location (and on board the vessel).

Is DDP same as door to door?

We offer door-to-door delivery services that are designed to simplify your logistics management. … DDU and DDP DDP (Delivered Duty Paid) – with this delivery method, all charges are paid by the seller of the goods (including transportation, shipping charges, duty and customs clearance costs).

What is FOB and CIF?

The abbreviation CIF stands for “cost, insurance and freight,” and FOB means “free on board.” These are terms are used in international trade in relation to shipping, where goods have to be delivered from one destination to another through maritime shipping.

What is the meaning of ex works in shipping terms?

Ex works (EXW) is an international trade term that describes when a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs.

What are Incoterms explain them briefly?

International commercial terms—Incoterms for short—clarify the rules and terms buyers and sellers use in international and domestic trade contracts. The International Chamber of Commerce (ICC) developed Incoterms in 1936 and updates them periodically to conform to changing trade practices.

What does FOB mean in Chinese?

Free on BoardFOB – Free on Board This is basically the DEFAULT pricing used when dealing with suppliers in China. FOB pricing means that it covers: Product cost.

What is the purpose of Incoterms?

The primary purpose of Incoterms is to define the responsibilities and costs between two parties correctly. The seller and the buyer create a sales contract between them, and they have to carefully consider everything when it comes to duty, delivery, tax and, in some instances, insurance.

Does DDP include unloading?

DDP stands for Delivery Duty Paid, an international commerce term (Incoterm) used to describe the delivery of goods where the seller takes most responsibility. … The buyer is then responsible for unloading the goods at the end destination.

Is DDU same as DAP?

DDU, which is also known as DAP (Duties At Place), means the buyer has to pay for all import customs clearance, duties, and taxes upon delivery. Basically, DDU/DAP means that the buyer has to pay for all the requisite import fees when the import arrives at their address.

Which is better CIF or FOB?

Cost, Insurance and Freight and Free on Board are international shipping agreements used in the transportation of goods between a buyer and a seller. CIF is considered a more expensive option when buying goods. FOB contracts relieve the seller of responsibility once the goods are shipped.

Who pays for FCA shipping?

Who pays transportation on FCA terms of delivery? Since the carrier is nominated by the buyer, the cost of transportation under FCA terms is paid by the buyer. The seller arranges to load the goods to the buyer’s nominated carrier.