If you’ve ever ordered packaging internationally, there’s a good chance you’ve experienced this:

You get a quote that seems dramatically cheaper than everyone else’s. You approve the order. Production finishes. The shipment leaves port.

Then suddenly:

• You owe duties
• You owe customs clearance fees
• You owe port handling fees
• You owe trucking fees
• You owe storage fees because nobody warned you that the shipment arrived

And somehow your “cheap” quote became the most expensive option on the table.

Welcome to the world of Incoterms.

At PCKG, we believe packaging buyers should actually understand what they’re paying for. So here’s a straightforward breakdown of the most common shipping terms, what they actually mean, and why they matter when sourcing custom packaging.

First Things First:

What Are Incoterms?

Incoterms (International Commercial Terms) are globally recognized rules that define who is responsible for what during an international shipment.

They determine:

• Who pays for shipping
• Who handles customs
• Who assumes risk during transit
• Who pays duties and tariffs
• Where ownership/responsibility transfers

Think of them as the “terms and conditions” of international freight.

And trust us, the difference between two Incoterms can mean thousands of dollars.

EXW (Ex Works)

“Good luck.”

EXW means the supplier makes the goods available at their factory… and that’s basically where their responsibility ends.

The buyer is responsible for:

• Picking up cargo
• Export clearance
• Ocean freight
• Import customs
• Duties/tariffs
• Final delivery

This is typically the cheapest-looking quote upfront because almost nothing is included, but it’s also one of the riskiest options for inexperienced importers. Unless you have your own freight forwarders, customs brokers, and logistics infrastructure, EXW can become chaotic very quickly.

FOB (Free On Board)

Better… but still incomplete.

FOB means the supplier is responsible for getting the goods onto the vessel at the origin port. After the shipment is loaded onto the ship, responsibility transfers to the buyer.

The buyer still pays for:

• Ocean freight
• Insurance
• Import duties
• Customs clearance
• Domestic trucking
• Port fees

FOB is extremely common in international manufacturing because it creates a clean handoff point. However, many buyers still underestimate how many charges occur after the cargo arrives.

DAP (Delivered At Place)

The “almost there” Incoterm.

DAP means the supplier arranges transportation all the way to the destination. Sounds great, right? Here’s the catch: the buyer is still responsible for import duties, taxes, and customs clearance. This is where many misunderstandings happen. A supplier may advertise “delivery included,” but when the shipment arrives, the customer suddenly receives:

• A customs bill
• A duty invoice
• Clearance charges
• Terminal handling fees

Technically, that supplier did nothing wrong, but it’s also why many importers feel blindsided.

DDP (Delivered Duty Paid)

The closest thing to all-inclusive pricing.

DDP means the supplier handles essentially everything:

• Manufacturing
• Export clearance
• Freight
• Import customs
• Duties/tariffs
• Final delivery

The customer receives one landed price with no surprise import invoices afterward.

This is how we structure our pricing at PCKG.

We act as:

• Manufacturer
• Exporter of record
• Importer of record

That allows us to provide true landed costing so our customers can budget accurately from day one. No mystery invoices. No “oh by the way” customs charges. No unexpected freight bills after production finishes.

Why This Matters More Than Ever

Global logistics are not simple anymore. Over the last several years, international supply chains have experienced:

• COVID shutdowns
• Port congestion
• Container shortages
• Suez Canal disruptions
• Tariff increases
• Red Sea rerouting
• Port strikes
• Rising insurance costs
• Sudden customs regulation changes

A cheap quote that excludes responsibility can quickly become very expensive when the market shifts. That’s why understanding Incoterms is no longer optional for growing brands.

The Problem With “Fake DDP”

One of the biggest issues we see in the packaging world is suppliers advertising DDP pricing that isn’t actually DDP.

Sometimes the shipment arrives under DAP terms instead. Sometimes the importer becomes responsible without realizing it. Sometimes customers are contacted directly by customs brokers demanding payment before release.

If the supplier cannot clearly explain:

• Who the importer of record is
• Who pays duties
• Who handles customs clearance
• Whether tariffs are included

…you probably do not have a true DDP structure.

So Which Incoterm Is Best?

There’s no universal answer. For experienced importers with internal logistics teams, FOB can make perfect sense. For growing coffee brands trying to simplify operations and avoid surprises, DDP is the safest and easiest structure. The important thing is understanding what’s actually included before comparing prices, because the cheapest quote on paper is not always the cheapest shipment in reality.

Final Thoughts

International packaging shouldn’t feel like a gamble. At PCKG, we believe education is part of the job. The more our customers understand logistics, materials, sustainability, and manufacturing, the better decisions they can make for their business. And honestly?
The packaging industry could use a little less gatekeeping.

If you ever have questions about Incoterms, freight structures, customs, or international packaging logistics, ask us. We’re always happy to explain how it works!