Incoterms are the International Chamber of Commerce's standard three-letter abbreviations for who does what in a shipment: who pays freight, who carries the risk, who clears customs. There are eleven in the 2020 edition. Spare-parts quotes use about five of them, and the difference between two of those can be a quarter of the invoice.
The ones you will actually see
EXW — Ex Works. The seller makes the goods available at their own premises. You arrange and pay for everything from that point: collection, freight, export clearance, import clearance, duty, delivery. Cheapest headline price, most work, and the one where a first-time buyer most often gets surprised. EXW also puts export clearance on you, which for a non-EU shipment you may not be able to do.
FCA — Free Carrier. The seller delivers the goods, cleared for export, to a carrier you nominate. This is EXW's sensible cousin: the seller does the loading and the export paperwork, you do the freight. For a courier shipment FCA at the seller's premises is functionally what most people think EXW means.
CPT / CIP — Carriage Paid To / Carriage and Insurance Paid To. The seller pays freight to a named destination. Risk transfers to you when the goods are handed to the first carrier, not on arrival — the seller pays for the transport but you carry the risk during it. CIP adds insurance that the seller buys on your behalf (at a high level of cover in Incoterms 2020). Import clearance and duty are still yours.
DAP — Delivered At Place. The seller delivers to your address, carrying the cost and the risk the whole way. You pay import duty and VAT and do the import clearance. This is the most common term on cross-border spare-parts quotes and usually the right default.
DDP — Delivered Duty Paid. The seller delivers to your address and pays duty and import taxes too. Maximum convenience, and the one to treat with slight caution: a seller outside your country who is not registered for VAT there can create a mess for your finance team. Ask how the VAT will be invoiced before you accept DDP from a foreign seller.
What you are really comparing
Two quotes at "€1,200" are not the same quote if one is EXW Milan and the other is DAP Dortmund. A realistic uplift for a 5 kg courier shipment inside the EU is €25–60; for a 200 kg palletised shipment it is several hundred; for anything crossing a customs border add clearance fees on top of duty.
When comparing, normalise everything to one term — usually "delivered to my door, duty and VAT excluded", which is DAP. Ask each supplier for that figure explicitly rather than converting yourself.
Inside the EU
For intra-EU shipments there is no customs clearance and no duty, so the practical choice collapses to "who books the courier". DAP is simplest. EXW is worth taking only if you have a freight account with better rates than the seller's, which for a single carton you almost certainly do not.
VAT on an intra-EU B2B sale is normally reverse-charged when both parties have valid VAT numbers — the seller invoices without VAT and you account for it. Give the supplier your VAT number with the order, not after the invoice has been issued.
Crossing a border
For imports from outside the EU, three numbers decide the landed cost: the duty rate for the commodity code, import VAT at your country's rate, and the customs broker's fee. Industrial automation components commonly fall under HS headings 8536, 8537 and 8504, with EU duty rates in the low single digits or zero — but the commodity code is the importer's responsibility to get right, not the seller's.
Ask for the commodity code and the country of origin on the quote. Both should be on the commercial invoice anyway, and a supplier who cannot provide them is a supplier whose shipment will sit at customs.
What to ask for on a quote
A spare-parts quote is complete when it says all five of these:
- The Incoterm and the named place — "DAP" alone is not a term, "DAP Dortmund" is.
- The estimated freight cost if the term does not include it.
- Packaging: carton, pallet, ESD, heat-treated wood for export.
- Country of origin and commodity code for cross-border shipments.
- Whether the price includes insurance, and for how much.
Every one of those is a normal question, and asking them in the request rather than after the quote saves a round trip.