Every packaging quote from a China-based manufacturer comes with a shipping term attached – FOB, EXW, DDP, or occasionally CIF – and that three-letter code changes who pays for what and who is responsible for the goods at each stage of the journey. Misreading it is one of the most common ways first-time buyers end up with a landed cost far higher than the quoted unit price suggested. Here is what the terms that actually come up in packaging sourcing mean in practice.
EXW (Ex Works)
Under EXW, the manufacturer’s responsibility ends the moment your packaging is ready for pickup at their factory door. You (or your freight forwarder) arrange and pay for everything from that point forward – loading the truck, export customs clearance in China, ocean or air freight, import customs in your destination country, and final delivery. EXW quotes look like the lowest number on paper because they exclude the most cost, not because the packaging is cheaper.
EXW makes sense if you already have an established freight forwarder and want full visibility and control over every leg of the shipment, including the ability to shop freight rates independently. It is a poor fit for a first-time buyer with no freight forwarding relationship, since you become responsible for export documentation you may not know how to arrange.
FOB (Free on Board)
FOB is the most common term in packaging sourcing. The manufacturer handles trucking the goods from the factory to the port and clearing export customs, and their responsibility transfers to you once the goods are loaded onto the shipping vessel. From that point, you (or your forwarder) handle ocean freight, import clearance, and final delivery. FOB gives most buyers a reasonable middle ground – the supplier handles the part of the process they have local expertise in, while you retain control of the international freight, which is often where meaningful cost savings can be found by comparing forwarders.
DDP (Delivered Duty Paid)
DDP is the opposite end of the spectrum from EXW: the manufacturer or their forwarding partner handles everything, including import customs clearance and duty payment in your country, and delivers to your warehouse door. DDP is the simplest option for a brand with no freight experience, but it typically carries a cost premium because the supplier is pricing in the freight, customs brokerage, and duty risk on your behalf, and you have less visibility into what you are actually paying for each component.
Which Term Should You Choose?
| Term | Best for | Watch out for |
|---|---|---|
| EXW | Buyers with an established freight forwarder | You are responsible for export documentation and full logistics chain |
| FOB | Most first-time and repeat buyers | You still need a freight forwarder for the ocean leg and import clearance |
| DDP | Buyers who want one all-in price with no logistics involvement | Usually the highest total cost; less visibility into duty and freight breakdown |
How This Affects Your Total Landed Cost
When comparing quotes from different packaging suppliers, always confirm which Incoterm the quoted price is based on before comparing numbers – an EXW quote and a DDP quote for the same order can differ by 15-30% simply because of what is and is not included, not because one factory is more expensive than the other. If you are budgeting a packaging project alongside product cost, see our packaging RFQ guide for what information to give a supplier so every quote you receive is comparable on the same basis.
Frequently Asked Questions
Is FOB or DDP better for a first order?
For most first-time buyers without an existing freight forwarder relationship, FOB with a freight forwarder recommended by the manufacturer, or DDP for full simplicity, are both reasonable starting points. EXW is generally better suited to buyers who already manage their own logistics.
Does the Incoterm affect who owns the goods in transit?
It affects who bears risk and cost at each stage, which is closely related to but not identical to legal ownership – cargo insurance should be arranged regardless of which Incoterm you use.
Can I negotiate the Incoterm with my packaging supplier?
Yes. Most manufacturers can quote under multiple terms – ask for both an FOB and a DDP price on the same order so you can compare and decide based on your own logistics capability.
Caiye Packaging quotes under EXW, FOB and DDP terms depending on what works best for your logistics setup. Contact us for a quote broken down by shipping term.