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EXW vs DDP : What is the Difference? | Full Guide Version 2020

EXW vs DDP : What is the Difference? | Full Guide Version 2020

When importing from China to anywhere in the world, you can see different terminologies. These intercoms are often familiar or easy to guess, but some are more complex. While choosing your method of shipping from China, you will see terms such as EXW or DDP. What are these terms and how are they different? In this article by ddpch, we will talk about EXW vs. DDP.

What Is Ex Works (EXW)?

Ex works (EXW) is an international trade concept that explains when a distributor makes a commodity available at a specified venue. In such a case, the purchaser of the commodity must pay the transportation costs. Ex works (EXW) is one of the 11 official Incoterms (International Commercial Terms). It is in fact a compilation of generic international trade terms provided by the Chamber of Commerce Worldwide. To make it short:

  • Ex works (EXW) is a shipping system in which a retailer makes a commodity available at a specific venue. In this case, the customer has to pay the costs of shipping.
  • When buyers have their goods, they are liable for certain dangers. Such hazards include loading the goods onto trucks, moving them onto a ship or plane, and complying with customs laws.
  • Ex works is an Incoterms (International Business Terms), one of 11 generic international trade terms issued by the Chamber of Commerce Worldwide.

Further Reading: What is the Difference Between Cargo and Freight? | Basic Information

What Is Delivered Duty Paid (DDP)?

Now that we know about EXW, before moving on to reading about EXW vs DDP, let’s first dig into DDP.

Delivered duty paid (DDP) is a distribution arrangement whereby the seller assumes all responsibility, liability, and costs associated with the transportation of the goods. This all happens before the buyer collects or transfers them to the port of destination. This arrangement covers payment of shipping costs, export and import taxes, insurance, and all other costs incurred during shipment to an agreed location in the buyer’s country of destination.

  • DDP imposes sole liability on the seller for the distribution of the products. 
  • The seller shall arrange all transport and related costs including export clearance and customs paperwork needed to enter the port of destination. 
  • The risks to the vendor are large and include VAT charges, bribery, and cost of storage in case any unexpected delays occur.

EXW vs DDP : The Difference

After knowing about both of these intercomes, we can read about EXW vs DDP. Below you can read information that will give a good perspective on EXW vs DDP.

In some cases, based on intercoms, Ex works shipping is considered as the opposite side of DDP. In reality, DDP (Delivery Duty Paid) services are certain services that the seller approves through the shipping of goods to the requested destination.

Further Reading: What is a Material Safety Data Sheet (MSDS) | Why is it Needed for International Shipping 2020?

On the other hand, Ex works is an operation where the seller is obligated to carry the product to the destination and the customer pays all costs. One of the important situations for Ex work shipping is that the item is ready for delivery and the exact date of receipt is available through the consideration of options.

The other argument is that there are some repair services in DDP shipping services. But the customer chooses Ex works shipping services manually. In the trading services there are different incoterms but what is more important is that each of them has both pluses and minuses. 

For instance, in Ex works shipping the seller has no responsibility after loading the product. And the buyer will accept all the risks. As mentioned above, DDP Services are not the same and the seller assumes all danger and insurance costs before the goods are available at the destination.

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