FOB, EXW, CIF or DDP? Shipping Terms Decoded for First-Time Importers

Factory quotes often include three capital letters that first-time buyers politely ignore — and those letters decide who pays for shipping, who handles customs, and where risk transfers. This is the plain-language decoder we give clients at our factory in Dongguan. The actual term is confirmed for each destination and project.

One framing makes all four instantly understandable: each term is a handover point. The question is simply: where, along the journey from our sewing floor to your warehouse, does the goods' cost and risk transfer from us to you?

All four terms are defined by Incoterms 2020, the International Chamber of Commerce rulebook both sides of a trade can reference. Here is the whole decoder in one table:

Term	Handover point (cost and risk)	Who books freight	Who clears customs
EXW	Our factory gate	You	You: export and import
FOB	Loaded on the vessel at the Chinese port	You (or your forwarder)	We clear export; you clear import
CIF	Loaded in China (risk); we pay freight and insurance to your port	We do, through to your destination port	We clear export; you clear import
DDP	Your door	We do	We do: export, import and duties

EXW (Ex Works): handover at the factory gate

We produce the goods and make them available at our factory. Everything after — trucking to port, export clearance, freight, import customs, delivery — is yours to arrange and pay.

Choose it when you have your own freight forwarder in China and want maximum control over logistics (some experienced importers do, and consolidating orders from several factories is a legitimate reason). Avoid it when this is your first import — EXW hands you the most paperwork in the country you know least.

FOB (Free On Board): handover at the Chinese port

We truck the goods to the port, clear Chinese export customs, and load them on the vessel. From that moment — cost and risk are yours: ocean/air freight, insurance, import clearance, last-mile delivery.

Choose it when you work with a freight forwarder (yours or one you hire) who quotes you the freight leg. FOB is the world's default B2B term for a reason: clean division of labor — the factory handles its own country, you handle yours. Good to know: FOB pairs naturally with sea freight for larger orders where freight cost per unit matters.

CIF (Cost, Insurance, Freight): we pay the voyage, you own the risk

We pay for freight and insurance to your destination port — but risk still transfers when the goods are loaded in China, and import clearance plus delivery from your port remain yours.

Choose it when you want one number that includes the ocean leg without arranging freight yourself, and you are comfortable handling import customs on your side. Watch for: the destination port is not your warehouse — budget the local leg.

DDP (Delivered Duty Paid): handover at your door

We handle everything: freight, export and import clearance, duties, and delivery to your address. You receive cartons; that is the whole job description on your side.

Choose it when it is your first order, the order is modest, and your time is worth more than logistics tuition. Ask the quote to confirm whether DDP is available for your destination and what timing applies. Trade-off: convenience is priced in, and at larger volumes sea-freight FOB usually beats express DDP per unit.

The honest decision guide for a 50-300 piece order

• First order, want minimal logistics involvement → ask whether DDP is available for the destination and confirm the quoted delivery scope.
• You already have a forwarder → FOB. Your forwarder quotes the freight; you keep control and usually save at volume.
• Reordering at larger volume, timeline flexible → FOB + sea freight is where unit economics improve meaningfully.
• EXW / CIF → situational; sensible when consolidating multiple suppliers (EXW) or when you want the freight bundled but can clear customs (CIF).

Whichever term, insist the quote states it explicitly — a price without a term is not comparable to anything. (Our guide to reading factory quotes covers the other lines on that document.)

Duties and taxes, briefly and honestly

Import duty rates depend on your country, the garment category and declared value — they are set by your government, not the factory, and they apply regardless of shipping term. The difference is only who files: under DDP we handle and include them; under FOB/CIF/EXW your side files (a forwarder or customs broker does this for a fee). First-time importers are sometimes surprised by the duty line — it belongs in your landed-cost math from day one, and a factory that helps you calculate landed cost before you order is doing you a service.

FAQ

Which term is cheapest? EXW has the lowest factory invoice and the highest hidden workload; DDP the reverse. The real comparison is landed cost — every cost until goods are in your warehouse — under each term. For small express orders the DDP premium is usually modest; at pallet volume FOB+sea wins.

Do you recommend one for a first 50-piece order? Ask whether DDP by express is available for the destination. The quotation should confirm timing, cost, customs responsibility, and final delivery scope before you choose it.

Can we switch terms on reorders? Yes, and clients regularly do — DDP for the first order, FOB+sea once volume grows. Each quote states its term; just ask for both if you want to compare.

Who owns damage in transit? Whoever holds risk at that point of the journey — that is exactly what the term defines. Under DDP, us until your door. Under FOB, you from loading; that is why cargo insurance exists, and under CIF we buy it for the voyage on your behalf.