Condensation occurs when warm moist air contacts a cooler surface. This typically occurs inside the duct, but can occur outside the duct in hot humid climates when exhausting relatively cool, conditioned air. Condensation can be minimized by employing insulation to reduce the temperature differential. It can also be managed by controlling where the condensation collects and drains, such as sloping the duct towards the outlet so any internal condensation drips outside.
In the case of external condensation, controlling via collection and drainage is difficult. Insulation is the best defense. Using closed cell insulation minimizes the chance humid air will reach the duct surface, but if any does, it is trapped by the impervious nature. Using open cell or fiber insulation allows humid air through, but also allows it to escape when conditions change.
In constantly humid conditions, closed cell insulation is a better choice, but if there are cycles of drier conditions, open cell or fiber insulation is a better choice.