A Chinese supplier quotes you two prices for the same order: FOB and DDP. The difference isn’t just the amount on the invoice. Each term changes who arranges shipping, handles customs, pays import charges, and carries the risk.
Here’s what that means for your shipment.
The Difference Between FOB and DDP
FOB (Free On Board) means the seller delivers the goods on board the vessel at the named port of shipment. The buyer takes over the transport risk once the goods are on board and arranges the main freight and import process.
On the other hand, DDP (Delivered Duty Paid) places more responsibility on the seller. The seller arranges delivery to the named destination, handles import clearance, and pays applicable import duties and taxes.
| Responsibility | FOB | DDP |
|---|---|---|
| Export clearance | Seller | Seller |
| Main international freight | Buyer | Seller |
| Import customs clearance | Buyer | Seller |
| Import duties and taxes | Buyer | Seller |
| Delivery to the named destination | Buyer | Seller |
| Risk transfers | When goods are on board the vessel | At the named destination, ready for unloading |
| Transport modes | Sea and inland waterway only | All transport modes |
Neither term requires the seller to purchase cargo insurance. However, the party carrying the transport risk should consider whether insurance is necessary.
What an FOB Price Leaves Out
An FOB quote from a Chinese supplier covers the seller’s responsibilities up to the point when the goods are loaded on board the vessel at the agreed port.
Once the goods are on board, the buyer arranges and pays for ocean freight, import clearance, and delivery to the final destination. Additional costs may include destination handling charges, customs brokerage fees, import duties, taxes, and inland transportation.
FOB can be a practical choice if you already work with a freight forwarder and customs broker. It gives you control over shipping arrangements while keeping freight costs separate from the supplier’s product price.
However, FOB applies only to sea and inland waterway transport. For containerized cargo handed over to a carrier at a terminal before loading onto the vessel, FCA (Free Carrier) may be more appropriate.
Where DDP Can Get Complicated
With DDP, the seller takes responsibility for delivering the goods to the agreed destination, including import clearance and applicable duties and taxes.
That can make budgeting easier because the buyer receives a delivered price rather than arranging each stage separately.
The challenge is whether the seller can actually fulfill those obligations. Some destinations restrict who can act as the importer of record or complete customs procedures. A supplier offering DDP must have a workable arrangement for import clearance and tax payment in the destination country.
Before accepting a DDP quote, confirm the delivery address, included charges, and how the seller will handle customs clearance.
For shipments where DDP is available, ASLG can help coordinate DDP shipping from China, including international freight and delivery arrangements.
Comparing FOB and DDP Quotes
When comparing FOB and DDP offers, look beyond the supplier’s quoted price and consider the total landed cost.
For FOB shipments, factor in ocean freight, destination charges, customs clearance, import duties, taxes, and final delivery. For DDP, confirm what’s included in the delivered price and whether the seller can legally handle import clearance at the destination.
Make sure your sales agreement specifies the named port or delivery location and references Incoterms® 2020. These details help clarify each party’s responsibilities and when the risk transfers.
FOB gives you more control if you already have freight and customs arrangements in place. DDP may be more convenient if you prefer the seller to manage delivery and import formalities, provided the arrangement is feasible at the destination.
