Incoterms for Workwear Buyers: EXW, FOB, CIF, DDP With Examples
The short answer
FOB is the normal term for bulk workwear: the factory delivers to the port and handles export clearance, and you own the freight, duty and import process. DDP costs more — typically 25–65% above FOB on light garments — because the supplier handles everything and pays the duty. EXW puts every logistics task on you, and CIF is FOB plus freight and insurance to your port.
The cheapest term on paper is rarely the cheapest landed cost. What matters is who is the importer of record, because that party owns the customs liability.
Last updated: September 2026. Based on Incoterms 2020.
Key takeaways
- Compare every quote in FOB terms. Converting to one baseline removes almost all of the confusion between suppliers.
- DDP is a service, not a discount. You pay a margin on freight and duty in exchange for zero customs administration.
- DAP and DDP are not the same. Under DAP the buyer still pays duty and clears customs.
- Under EXW you are responsible for export clearance too, which is awkward if you have no entity in China.
- The importer of record controls duty recovery. If you cannot reclaim VAT, DDP may hide a real cost.
1. The four terms workwear buyers actually use
| Term | Supplier delivers to | Supplier pays | Buyer pays | Typical use |
|---|---|---|---|---|
| EXW | Factory gate | Nothing beyond packing | Export clearance, freight, duty, delivery | Rarely used for garments |
| FOB | Named port of shipment | Inland transport to port, export clearance | Freight, insurance, duty, clearance, delivery | Standard for bulk workwear |
| CIF | Named destination port | As FOB, plus freight and insurance | Duty, clearance, inland delivery | Simple, but you still own customs |
| DDP | Your delivery address | Everything, including import duty | Nothing but receiving the goods | Small orders, new importers, GCC |
Also worth knowing: DAP (delivered at place) means the supplier delivers to your address but you remain responsible for import duty and clearance. Many buyers assume DAP and DDP are interchangeable, and discover the difference on the duty invoice.
2. Cost responsibility, line by line
| Cost item | EXW | FOB | CIF | DDP |
|---|---|---|---|---|
| Packing and marking | Supplier | Supplier | Supplier | Supplier |
| Inland freight to port | Buyer | Supplier | Supplier | Supplier |
| Export clearance | Buyer | Supplier | Supplier | Supplier |
| Ocean or air freight | Buyer | Buyer | Supplier | Supplier |
| Marine insurance | Buyer | Buyer | Supplier | Supplier |
| Import duty | Buyer | Buyer | Buyer | Supplier |
| Import clearance | Buyer | Buyer | Buyer | Supplier |
| Inland delivery to your address | Buyer | Buyer | Buyer | Supplier |
| Importer of record | Buyer | Buyer | Buyer | Supplier |
3. Worked example: 1,000 work jackets to Germany
| Line | FOB | CIF | DDP |
|---|---|---|---|
| Goods (1,000 × $12.00) | $12,000 | $12,000 | $12,000 |
| Inland freight and export clearance | included | included | included |
| Sea freight | $700 | $700 | $780 |
| Insurance | $40 | $40 | $45 |
| Import duty (indicative 12%) | $1,528 | $1,528 | $1,539 |
| Clearance and port fees | $220 | $220 | $320 |
| Inland delivery | $180 | $180 | $250 |
| Supplier margin on logistics | — | — | $180 |
| Total to your warehouse | $14,668 | $14,668 | $15,114 |
| Per jacket | $14.67 | $14.67 | $15.11 |
In this example DDP adds only about 3%, because the goods value is high relative to freight. On cheap, light garments — 1,000 vests at US$2.20 — the same logistics margin is spread over a much smaller unit price, and DDP can look 40–65% higher than FOB.
4. Which term should you choose?
| Situation | Recommended term | Reason |
|---|---|---|
| First bulk order, you have a customs broker | FOB | Lowest total cost, full control |
| You buy regularly and consolidate shipments | FOB | You can combine suppliers into one clearance |
| You are VAT-registered and reclaim import VAT | FOB or CIF | You need to be the importer of record |
| You have no import experience or no broker | DDP | The supplier handles everything |
| Order is small (under 1 m³) | DDP or express | Administration costs dominate otherwise |
| Destination is the GCC or a market with strict clearance | DDP | Local clearance complexity is high |
| You need duty drawback or preferential origin | FOB | Requires you to control documentation |
5. The traps in each term
| Trap | What happens | How to avoid it |
|---|---|---|
| Comparing FOB with DDP | The "cheaper" quote looks 40% lower and is not comparable | Normalise every quote to FOB |
| Assuming DAP means duty paid | Duty invoice arrives from your own broker | Ask explicitly: "DDP, duty paid, you are the importer of record" |
| FOB without a port named | Ambiguity about where your responsibility starts | Always name the port, for example FOB Shanghai |
| CIF with poor insurance cover | Insurance is minimum cover, not all-risk | Ask for the policy summary |
| DDP with no invoice for duty | You cannot document landed cost or reclaim VAT | Request the duty receipt or a landed-cost breakdown |
| EXW with no Chinese entity | You cannot file the export declaration | Avoid EXW unless your forwarder handles export clearance |
6. How to compare an FOB quote with a DDP quote
- Confirm the port and the shipping term on both quotations.
- Convert the DDP price into a landed cost per garment.
- Ask your own forwarder for an all-in rate on the same volume and lane.
- Add duty and clearance to the FOB option yourself.
- Compare the two landed figures, not the two unit prices.
If your forwarder's landed figure is within 5% of the DDP offer, stay with FOB and keep control. If DDP is cheaper and you have no VAT to reclaim, DDP is the pragmatic choice.
7. Frequently asked questions
What does FOB mean for workwear orders?
FOB (free on board) means the supplier delivers the goods to the named port and completes export clearance. From that point, freight, insurance, import duty and clearance are your responsibility.
Is DDP better than FOB?
Not better, just different. DDP is more convenient because the supplier handles freight, duty and clearance, but it costs more — commonly 20–65% above FOB depending on the value density of the garments. Buyers who reclaim import VAT usually prefer FOB.
What is the difference between DDP and DAP?
Under DDP the supplier pays import duty and acts as importer of record. Under DAP the supplier delivers to your address but you still clear customs and pay duty. The difference can be a five-figure surprise on a large shipment.
Should I buy workwear on CIF terms?
CIF is workable if you already have a customs broker, because you still handle duty and clearance. It removes freight negotiation from your workload but not the customs administration.
Who pays import duty under FOB?
You do, as the importer of record. Duty is assessed on the CIF value of the goods, so it includes the freight and insurance you paid, not just the product price.
Can I use EXW for garments from China?
Technically yes, practically it is awkward: as buyer you must arrange export clearance from China, which requires a Chinese entity or a forwarder willing to handle it. FOB is simpler and normally costs the same or less.
Which term is best for a first order from China?
If you have an experienced freight forwarder, use FOB and let them manage the import. If you do not, use DDP for the first order so you can learn the process while the supplier manages customs.
Do Incoterms say who insures the goods?
Only CIF and CIP require the seller to arrange insurance, and it is minimum cover. Under FOB and EXW insurance is your decision, and marine insurance of 0.3–0.5% of CIF value is inexpensive protection.
Get both terms quoted side by side
Send us your order and delivery address, and we will quote FOB and DDP on the same specification within 24 hours, with the freight and duty lines shown separately so you can compare them properly.
