EXW vs DDP: The Great Supply Chain Debate

When negotiating a purchase order with an overseas supplier, you will inevitably have to choose an Incoterm. The two most extreme opposites on the spectrum are EXW (Ex Works) and DDP (Delivered Duty Paid).

What is EXW?

Under EXW, the supplier's only responsibility is to manufacture the goods and leave them at their factory loading dock. You (the buyer) must hire a freight forwarder to pick them up, clear export customs, sail them across the ocean, pay import duties, and truck them to your warehouse. It is the cheapest price for the goods, but requires maximum logistical effort.

What is DDP?

Under DDP, the supplier handles literally everything. They act like an Amazon Prime delivery. You pay one flat fee, and the goods magically show up at your warehouse door, with all freight and customs duties already paid. It requires zero logistical effort, but it is almost always the most expensive option.

The "Convenience Premium" Trap

Many new importers choose DDP because they are intimidated by logistics. However, suppliers know this. When a supplier quotes you a DDP price, they do not just pass along the exact freight cost. They will often add a massive 20% to 40% markup on the freight to compensate themselves for the administrative hassle and risk of clearing customs in your country.

By getting a separate EXW quote, and asking your own freight forwarder for a logistics quote, you can use this calculator to uncover exactly how much profit the supplier is secretly baking into their DDP freight quote.