Guides / Cost

Which Incoterm to Use on a Vietnam Order, and What Each One Hides

September 3, 2026

An Incoterm is not a shipping option. It is the line that says where the seller’s responsibility ends and yours begins, for cost, for risk and for paperwork. On a Vietnam order, three terms cover almost every case, and choosing between them changes the quote by more than most buyers expect.

The three that matter

EXW, ex works. The factory makes the goods available at its own door. Everything after that, including export clearance, is yours. The quote is the cleanest view of the product cost you will ever get, and it is the term that requires the most from you.

FOB, free on board. The factory delivers the goods loaded on the vessel at a named Vietnamese port, with export formalities complete. You arrange and pay ocean freight onward. This is the workhorse term for Vietnam orders, usually written as FOB Ho Chi Minh City for factories in the south or FOB Haiphong for the north.

DDP, delivered duty paid. The seller delivers to your address with import duty and clearance handled. Maximum convenience, minimum visibility, and the term where the largest unexplained margins hide.

Why quotes on different terms are not comparable

This is the practical trap. A buyer sends the same specification to three factories, receives an EXW quote, an FOB quote and a DDP quote, and compares the numbers. The comparison is meaningless.

On a bulky, light product the freight share of landed cost can be large enough to reverse the ranking completely. On a small, dense product it barely moves it. Either way you are not comparing manufacturing.

The fix is one line in the brief: ask every factory to quote FOB at a named port. FOB is quotable by almost every Vietnamese exporter, it includes the local costs you have no way to control, and it excludes the freight you can shop separately.

What EXW really costs you

EXW is attractive because the number is small and honest. What it hands you:

• Arranging haulage from the factory to the port.
• Vietnamese export clearance, which as a foreign buyer you cannot normally file yourself, so you appoint an agent.
• Terminal handling and local charges, which are quoted by the forwarder rather than the factory.
• Risk from the moment the goods are made available, including while they sit in the factory yard.

For a buyer with a Vietnamese agent or a forwarder already set up, EXW gives the most control and the clearest cost picture. For a first-time importer with neither, it converts a manufacturing project into a logistics project.

What DDP hides

DDP is popular with first-time buyers for an obvious reason: one number, goods arrive. The costs of that convenience:

No visibility. You cannot tell what is product, what is freight and what is duty, so you cannot tell where to improve.

Customs exposure. The importer of record has obligations in your country. Arrangements where the seller nominally clears goods on your behalf can leave the declared value, classification and origin outside your control, while the liability remains near you. On regulated goods or goods facing origin scrutiny that is a real risk, not a theoretical one.

A margin you never see. The seller prices the uncertainty of a customs regime it does not control, and that price is inside the unit cost.

DDP has a legitimate place: small shipments, samples, and buyers who genuinely have no import capability and accept the premium knowingly.

Which to choose

A reasonable default ladder:

First orders and no forwarder: FOB at a named port, with your own forwarder appointed for the ocean leg. You get a comparable quote and you build the import relationship you will need anyway.

Once you have a forwarder you trust and volume to move: stay on FOB. There is rarely a reason to move to EXW unless you are consolidating from several Vietnamese factories into one container, which is exactly where EXW wins.

Sample shipments and small parcels: DDP is fine, and the premium is small in absolute terms.

Write it into the brief

The Incoterm belongs in the first brief, not in the negotiation. It changes the quote, it changes who the factory has to talk to, and it changes the documents your order will produce. A brief that says “1,200 units, FOB Ho Chi Minh City” gets a comparable quote. A brief that omits it gets three quotes you cannot line up.

While you are at it, the documents follow from the term. Origin paperwork in particular is issued in Vietnam and cannot be reconstructed later. See certificates of origin for goods made in Vietnam.

The terms between FOB and DDP

Three more come up often enough to be worth recognising.

FCA, free carrier. The seller delivers to a named place, cleared for export. It is the term the rules actually intend for containerised cargo, since containers are handed to a carrier at a terminal rather than lifted over a ship’s rail. Many Vietnamese factories quote FOB regardless out of habit, and in practice the difference rarely causes trouble on standard container shipments.

CIF, cost insurance and freight. The seller arranges and pays ocean freight and insurance to your destination port. Attractive because it looks like one number, awkward because you inherit a carrier and a schedule you did not choose, and destination charges still land on you.

DAP, delivered at place. Like DDP but you handle import clearance and duty. It is often the sensible middle ground: the seller manages the transport, you keep control of customs and the liabilities that come with it.

If a factory offers DDP and you want the convenience without the customs exposure, asking for DAP instead is usually a short conversation.

Where risk passes, not just cost

Incoterms transfer two things and buyers usually only think about one.

Under EXW, risk passes when goods are made available at the factory. If they are damaged sitting in the yard waiting for your truck, that is your loss. Under FOB, risk passes when the goods are loaded. Under DDP, it stays with the seller almost the whole way.

This matters for insurance. If you buy FOB, your cargo insurance should start at the port of loading, and there is a gap between the factory gate and the vessel that neither policy may cover unless someone arranged it. Ask your forwarder to confirm where your cover begins and whether it matches where your risk begins. The two are often a few hundred kilometres apart.

Appointing a forwarder before you need one

If you are buying FOB, the ocean leg is yours, and the time to arrange it is before production finishes rather than the week the goods are ready.

Get a forwarder appointed early enough that they can talk to the factory directly about booking, cut-off times and documents. Ask for a rate that names the origin charges, the ocean freight, the destination charges and what is excluded, because a headline ocean rate with unnamed local charges is not a quote you can compare.

Two practical points. Ask the factory which forwarders it already works with, then get an independent quote as well. Factory-recommended forwarders are often good and occasionally carry a commission, and the comparison costs one email. And confirm who is doing the export declaration in Vietnam, because on FOB that is the factory’s job and on EXW it becomes yours.

Put the term in every document

The Incoterm belongs on the quotation, the proforma invoice, the purchase order and the commercial invoice, written the same way each time, with the named place after it.

“FOB” on its own is incomplete. “FOB Ho Chi Minh City” is a term. The named place is what decides where costs and risk actually change hands, and a term without one is the sort of ambiguity that only matters on the day something goes wrong.

Send your brief with the Incoterm stated and we will match you with manufacturers that quote on those terms as standard. For the rest of what moves a turnkey number, see what drives the cost of turnkey manufacturing in Vietnam.

Frequently asked questions

Keep reading

• Bill of Materials for a Turnkey Order: How to Read the Cost Line by Line
• What Drives the Cost of Turnkey Manufacturing in Vietnam