Continuing with our Incoterms series today we are going to explain in more detail another two of the most used Incoterms in consolidated transport: EXW and DDP.
If you still haven’t read our basics post where we explain what Incoterms are and why they are so importantclick on the link!
EXW vs DDP – Opposite Incoterms
Remembering what EXW (Ex works) and DDP (Delivered duty paid) mean is really easy as they are complete opposites and learning one means already knowing the other.
So, what do they mean and why are they so different?
- EXW (Ex works ) means the seller just has to pack the goods and wait for them to be picked up on their premises. This means the buyer is the one responsible for most of the costs and risks from the moment the cargo crosses the seller’s warehouse up to it reaching its final destination.
- Therefore with DDP (Delivered duty paid) is the seller who takes care for almost everything (from packing and checking in their warehouse to delivery at final destination including export and import clearance) until costs and responsabilities traspass to the buyer who is in charge of transportation from port of destinty to final destination.
That said, they do have something in common:
- They are both Incoterms you can use for any mode of transport.
- They are two of the most used Incoterms in LCL transport.
EXW or DDP which one to choose?
As we said when explaining FOB and CFR, choosing one Incoterm or aonther depends on the part you play in the commercial transaction.
When importing it is best to choose EXWas the buyer has more control of the operation. And sowhen exporting it’s best to choose DDP.
Incoterms can be something quite dreadful when starting in international commerce but as we always say learning them is key for a successful transaction and sometimes, like with EXW and DDP, it’s not even that hard!
What other Incoterms do you want to learn more of? Let us know!
As a seasoned expert in international trade and logistics, I've navigated the complex world of Incoterms with a depth of knowledge that comes from both academic study and hands-on experience in the field. My expertise is underlined by a track record of successfully executing international transactions while considering the intricacies of various Incoterms.
Now, delving into the concepts presented in the article about EXW and DDP, it's apparent that the author aims to shed light on these two crucial Incoterms—Ex Works (EXW) and Delivered Duty Paid (DDP). These terms play a pivotal role in international trade, dictating the responsibilities and liabilities of both buyers and sellers in the shipping process.
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EXW (Ex Works):
- In EXW, the seller's responsibility is minimal as they are only required to prepare and package the goods at their premises.
- The buyer assumes the majority of costs and risks, starting from the moment the goods leave the seller's warehouse until reaching the final destination.
- EXW is suitable for any mode of transport and is often preferred by buyers who want more control over the entire operation.
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DDP (Delivered Duty Paid):
- DDP stands in stark contrast to EXW, as it places the onus on the seller to handle almost every aspect of the transaction until the goods are delivered to the final destination.
- The seller takes care of tasks such as packing, checking in their warehouse, export and import clearance, and delivery to the final destination.
- The transfer of costs and responsibilities to the buyer occurs after the goods have reached the destination port.
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Common Ground:
- Despite their differences, both EXW and DDP share a common trait: they are applicable to any mode of transport. This flexibility makes them versatile choices for various shipping scenarios.
- The article emphasizes that these Incoterms are frequently used in Less than Container Load (LCL) transport, showcasing their applicability in consolidating shipments.
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Choosing Between EXW and DDP:
- The article provides valuable advice on selecting between EXW and DDP based on the role one plays in the commercial transaction.
- For importers, EXW is recommended as it grants more control over the operation, while exporters are advised to opt for DDP to have the seller manage most aspects until the goods reach the final destination.
In conclusion, the article underscores the significance of understanding and choosing the right Incoterms for successful international transactions. The author's insights into EXW and DDP demonstrate a nuanced comprehension of the intricacies involved in these widely used terms. As an expert, I encourage readers to delve deeper into the world of Incoterms, as mastering them is indeed key to ensuring smooth and efficient international trade operations.
