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FOB vs DDP Explained: Which Incoterm Should You Use?
Understanding Incoterms is critical for international trade. Two of the most common — FOB (Free on Board) and DDP (Delivered Duty Paid) — have very different implications for cost, risk and responsibility.
What is FOB (Free on Board)?
Under FOB, the seller delivers goods to the port of origin and loads them onto the vessel. Once goods cross the ship's rail, all risk and cost transfers to the buyer. You're responsible for ocean freight, insurance, customs clearance and delivery.
What is DDP (Delivered Duty Paid)?
Under DDP, the seller handles everything: packaging, inland transport, export customs, ocean/air freight, import customs, duties and final delivery to your specified address. You receive goods at your door — all costs included.
Key Differences
| Factor | FOB | DDP |
|---|---|---|
| Cost transparency | Variable — many hidden costs | Fixed — all-inclusive price |
| Customs handling | Buyer's responsibility | Seller handles everything |
| Risk transfer | At port of origin | At your door |
| Best for | Experienced importers | Businesses wanting simplicity |
Which Should You Choose?
For most businesses — especially those importing from China to Africa, Europe or the Middle East — DDP is the safer choice. You get predictable costs, zero customs headaches and full accountability from your sourcing partner.
Other Incoterms to Know
EXW (Ex Works): Buyer handles everything from factory gate. Maximum risk, lowest quoted price.
CIF (Cost, Insurance, Freight): Seller covers freight and insurance to destination port. Buyer handles import customs and delivery.
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