FOB and DDP allocate delivery responsibilities very differently. Under FOB, delivery and risk transfer occur when goods are on board the vessel at the named shipment port. Under DDP, the seller delivers at the named destination, import-cleared and ready for unloading. The right choice depends on transport mode, control needs and destination rules—not simply which headline price is lower.
Start with the full term and the named location
Write the agreed rule, precise port or destination and ‘Incoterms® 2020’ in the contract. A term without a location leaves an important responsibility boundary unclear. ‘Door to door’ is a logistics description, not a substitute for a defined Incoterms rule.
FOB is only for sea or inland waterway transport. For air, courier or a handover to a carrier before vessel loading, discuss an appropriate any-mode term such as FCA instead. Container shipments often involve an earlier terminal handover, so check the actual delivery point before choosing FOB.
Compare delivery, cost and risk separately
The party paying a cost is not necessarily the party bearing transit risk at that stage. Incoterms allocate specified obligations between seller and buyer; they do not replace the sales contract, decide ownership transfer or set payment terms.
| Question | FOB | DDP |
|---|---|---|
| Transport mode | Sea or inland waterway only | Any mode or combination |
| Delivery and risk transfer | On board the vessel at the named shipment port | At the named destination, import-cleared, on arriving transport ready for unloading |
| Export clearance | Seller | Seller |
| Main carriage | Buyer arranges and pays | Seller arranges and pays |
| Import clearance and duties / taxes | Buyer | Seller, subject to lawful destination arrangements |
| Destination unloading | Buyer’s onward arrangements | Buyer; review unloading charges already included in the carriage contract |
| Mandatory cargo insurance obligation under the rule | Neither party is required to arrange it for the other | Neither party is required to arrange it for the other |
What an importer needs to organize under FOB
Under FOB, ask the seller to identify the loading port and confirm export clearance and delivery on board. Coordinate vessel booking and shipping instructions with the forwarder. Check who communicates cut-off dates and how changes are handled.
The buyer plans main carriage, destination import clearance and onward delivery. Request an itemized logistics offer rather than treating the ocean freight line as the total landed cost. Consider cargo insurance separately and confirm cover with your insurer.
- Confirm port and carrier instructions before the collection deadline.
- Ask about terminal, documentation, storage and delay charges.
- Prepare destination customs information before the goods arrive.
DDP requires a lawful destination import arrangement
DDP places import clearance and applicable duties and taxes on the seller under the rule. That does not mean a foreign seller can legally act as importer in every country. Ask who will be the importer of record, which broker is involved and whether the seller can perform the agreed obligations.
Before accepting a DDP offer, have the relevant broker or tax adviser check product classification, import permissions, tax treatment and documentation. Country and product rules differ. Do not accept undervaluation, an unexplained customs route or a promise that a single price removes all compliance responsibility.
If the seller cannot lawfully handle import clearance, discuss a different arrangement such as DAP rather than labeling the offer DDP while leaving the buyer to perform undisclosed obligations.
Choose by the actual purchasing situation
FOB can suit an importer with suitable sea-freight arrangements and destination customs support. DDP may suit a buyer seeking seller-managed delivery when the seller can lawfully meet the destination obligations. Neither term guarantees a delivery date or removes product-compliance risks.
| Situation | Discussion to have | Key check |
|---|---|---|
| Experienced importer with a sea-freight forwarder | FOB may fit the vessel-loading delivery point | Named shipment port and origin charge boundaries |
| Air or courier shipment | Use an appropriate any-mode term, not FOB | Actual carrier handover and responsibility split |
| Container handed over at a terminal before loading | Discuss FCA and document requirements | Delivery evidence and risk boundary |
| Seller-managed delivery to a destination address | DDP only if import obligations can be performed lawfully | Importer, duties, taxes, access and unloading |
| Destination importer must be the buyer | Discuss DAP or another suitable rule | Import clearance and tax responsibilities in writing |
Make the quotations comparable
Compare the same product quantity, packing, cargo dimensions, weights and destination. Record quote validity, expected transit routing, readiness assumptions and delivery access. A cheaper freight quote may exclude handling or destination costs; do not describe that difference as a saving until the scope is reconciled.
Illustrative Example — a shipping quote worksheet should list product cost, origin handling, export formalities, main carriage, insurance if arranged, destination handling, import costs, final delivery and unloading arrangements. Mark each line as included, excluded or awaiting confirmation; do not insert assumed duty rates.
- Ask whether duties and import taxes are included and how changes are treated.
- Check who provides customs entries and delivery evidence.
- Separate freight transit estimates from factory lead time and customs delays.
What to send when requesting shipping support
Give the sourcing team supplier locations, readiness dates, product descriptions, available classification information, carton counts, dimensions, weights and any batteries, liquids or other special handling needs. Include the full delivery address and unloading constraints.
Ask for the delivery term and named place you want compared. If multiple suppliers are involved, explain whether receiving checks, consolidation or repacking are needed. NitaSource can discuss shipping coordination under the agreed scope; destination clearance and tax questions require the relevant local specialist.
- Include available product documents; do not guess a classification code.
- Identify who approves shipment release after inspection.
- State whether you need Managed Sourcing coordination or only a logistics discussion.
Frequently asked questions
This guide is general purchasing information, not destination-specific customs, tax or legal advice. Verify the actual transaction before contracting.
Can FOB be used for air freight?
No. Under Incoterms 2020, FOB is for sea and inland waterway transport. Discuss an appropriate any-mode rule with the seller and logistics provider.
Does DDP include unloading?
DDP delivery is ready for unloading at the named destination. The buyer normally handles unloading; review charges already included in the seller’s carriage arrangement and record any special agreement.
Does DDP guarantee there will be no extra charges?
No. Confirm the lawful import arrangement, quote validity, cargo assumptions and exclusions. Product or destination changes can affect the transaction; the contract must address them.
Do Incoterms decide who owns the goods?
No. Ownership, payment terms, product specifications and remedies need separate contractual provisions.