Two suppliers quote for the same cartons. One price is marked EXW and looks lower; the other is DDP and appears expensive. Comparing the totals immediately can hide the most important difference: the quoted delivery responsibilities are not the same.
Incoterms® rules allocate specified delivery tasks, costs and risks between buyer and seller. They do not replace the entire sales contract. Product quality, payment arrangements and other commercial requirements still need their own agreement.
Start with the named place
“EXW factory” or “DDP destination” is too vague for a careful comparison. Ask for the full named location and the applicable rules edition. A warehouse address, a port and your shop’s receiving area are different points, with different remaining work.
The ICC Academy’s explanation of EXW and DDP under Incoterms® 2020 describes their contrasting obligations. Under EXW, the seller makes the goods available at the named place; the buyer generally takes on loading and onward arrangements, including export clearance. Under DDP, the seller bears extensive responsibilities through delivery at the destination, including import clearance and duties. Delivery is ready for unloading; unloading is normally the buyer’s task.
These are broad distinctions. Use the actual rule and contract for the transaction, particularly where customs procedures or local restrictions affect what either party can do.
Build a comparison before negotiating
For a fictional order of café equipment, make a list of work between the supplier’s door and your usable receiving point. Put a responsible party beside collection, loading, export formalities, main transport, import formalities, final delivery and unloading. Then identify which costs remain outside each quote.
Ask the EXW supplier how collection is arranged and whether your appointed provider can carry out the required formalities. Ask the DDP supplier who will fulfil import obligations and precisely where delivery ends. “Door to door” in an email is not a detailed answer to either question.
Keep unknown costs visible
If an amount is not yet known, mark it as an estimate or unresolved item. Do not enter zero simply to make the spreadsheet complete. Also check quote validity, currency, quantities and packaging assumptions so the comparison does not quietly mix different orders.
An apparently lower EXW price may remain attractive after the buyer’s responsibilities are priced, or it may not. A DDP offer may simplify some arrangements, but the seller must actually be able to fulfil them. A qualified freight forwarder or customs adviser can help check the proposed arrangement before commitment.
The useful question is therefore not “Which three-letter term is cheapest?” It is “What exactly reaches this named place, what do we still have to do, and which uncertainties remain?” That answer gives a purchasing decision something firmer than a headline price.
AI-generated editorial illustration; not a documentary photograph.