Guide
Guide
FOB vs DDP from China: which terms to buy on, and what each leaves to you
The trade term printed beside a supplier's price decides which legs of the trip are already paid for and which ones you still book, who files the US customs entry and who pays the duty. This guide sets EXW, FOB, CIF, DAP and DDP against the lines of a landed cost, and explains what a delivered duty paid price asks of the importer of record. It is written for businesses buying from China by the pallet or the container.
The basics
What a trade term settles, and what it leaves open
A trade term on a quote is an Incoterms® rule plus a named place: FOB and the port of loading in China, say, or DDP and your address. Together they settle who books and pays for each leg of the trip, where the risk of loss or damage passes from the seller to you, and who deals with customs at each end. The current edition is Incoterms® 2020. Name it beside the term on the quote and the contract, so both sides are reading the same rule.
A term does not decide when the goods become yours, when or how you pay, or what anything costs. Ownership and payment belong in the sales contract, and the ICC's own training material says the rules do not deal with the passing of title. Payment terms are a different clause, with a guide of their own.
The ICC's checklist for the rules also warns that charges at the terminal, for the container and for customs processing cause disputes even when the term is clear. List those charges on the quote and agree in writing who pays each one.
There are eleven Incoterms® rules. A buyer bringing goods in from China meets five of them most often: EXW, FOB, CIF, DAP and DDP. FCA belongs on the list as well, because it is the rule the ICC points to for containers.
The terms
EXW, FCA, FOB, CIF, DAP and DDP, side by side
Each term with its named place, under the Incoterms® 2020 rules. The cells are our summary of who does what, not the rules' own text.
| Term and named place | The seller in China arranges | You arrange | Risk passes to you |
|---|---|---|---|
| EXW (Ex Works), at the seller's factory or warehouse | The goods, packed and ready to collect | Loading, haulage, the export declaration in China, the ocean leg, insurance if you want it, the US entry, duty and delivery | When the goods are put at your disposal at the seller's premises |
| FCA (Free Carrier), at a named place in China | Export clearance, and handing the goods to the carrier you name at that place | The main carriage, insurance if you want it, the entry, duty and delivery | When the goods are handed to your carrier |
| FOB (Free On Board), at the port of loading | Haulage to the port, export clearance and loading onto the ship you book | The ocean leg, insurance if you want it, the entry, duty and delivery | Once the goods are on board |
| CIF (Cost, Insurance and Freight), to the port of destination | As under FOB, plus the ocean freight to your port and minimum cargo insurance in your favour | Charges at your port outside the freight contract, the entry, duty and delivery | Once the goods are on board in China, although the seller pays the freight |
| DAP (Delivered At Place), at your address or another named place | Everything up to that place, with the goods still on the truck | Import clearance (the ISF, the entry and a bond), duty, the fees on the value and unloading | At that place, ready for unloading |
| DDP (Delivered Duty Paid), at your address | Everything up to that place, import clearance and duty included | Unloading | At that place, cleared and ready for unloading |
Incoterms® and the Incoterms® 2020 logo are trademarks of ICC.
FOB and CIF were written for goods loaded over a ship's side. A container is usually handed over at a terminal, often days before it goes on board, so the ICC points container shipments to FCA, or to CPT or CIP when the seller pays for the main carriage. CIF also names a port of destination, so a container that carries on inland by rail is a case for CPT or CIP. Under the Incoterms® 2020 rules, an FCA buyer can still have its carrier issue an on-board bill of lading to the seller, for a bank that asks for one.
Line by line
Which lines of a landed cost each term already covers
The lines run in the order the costs happen. "In the price" means the seller's price covers that line, and "You add" means you book and pay it on top. Under DAP and DDP the seller carries the risk all the way to your door but owes you no insurance, so those two cells read "Seller's risk".
| Line | EXW | FOB | CIF | DAP | DDP |
|---|---|---|---|---|---|
| The goods | In the price | In the price | In the price | In the price | In the price |
| Haulage to the port | You add | In the price | In the price | In the price | In the price |
| Export clearance | You add | In the price | In the price | In the price | In the price |
| The ocean leg | You add | You add | In the price | In the price | In the price |
| Cargo insurance | You add, if wanted | You add, if wanted | Minimum cover in the price | Seller's risk | Seller's risk |
| The ISF and the customs entry | You add | You add | You add | You add | In the price |
| Duty | You add | You add | You add | You add | In the price |
| Fees on the value | You add | You add | You add | You add | In the price |
| Drayage and delivery | You add | You add | You add | In the price | In the price |
Put the lines marked "You add" into the landed cost calculator beside a delivered price, and compare the cost per unit. What each line covers is on the shipping page.
A delivered price still has every one of these lines inside it. What changes is who picked the forwarder, the broker and the trucker, and whether you can see what each of them charged.
Choosing
Which term suits which buyer
Run the ocean leg yourself
If you already work with a forwarder and a customs broker, buy on FOB, or on FCA for a container handed over at a terminal. The freight, the entry and the declared value stay in your hands, and each one is priced on its own.
Take a delivered price
This suits a buyer who imports now and then and wants one figure to the door. DAP keeps the entry in your name and in your broker's hands. DDP hands it to the seller, so read the next section before you accept it.
Ask again when a factory quotes EXW
Ask for FCA or FOB instead, unless your own forwarder in China will make the export declaration and load the goods. The ICC suggests EXW, if at all, for sales that stay inside one country.
Check what CIF leaves at your port
The seller pays the freight to your port and buys minimum cover, but the risk is yours once the goods are on board in China, and port charges outside the freight contract fall to you. For a container going on inland, CIP fits the trip and calls for broader, all-risks cover.
Agree who carries a duty change
The duty rate that applies is the one in force on the entry date. Under DDP the seller pays it, and under EXW, FCA, FOB, CIF and DAP you do. On any quote, put in writing who carries a change between the quote and the entry. How we work explains who carries a tariff change on our quotes.
Importer of record
Delivered duty paid: who the importer of record is
On a US entry the importer of record is the owner or purchaser of the goods, or a licensed customs broker they appoint. It files the entry using reasonable care, and that care covers the value and the classification (19 U.S.C. 1484). The duty is the importer's own debt to the United States: handing the money to a broker does not settle it if the broker never pays it over (19 CFR 141.1). Under EXW, FOB, CIF and DAP the importer of record is normally you. Under DDP it is the seller, or someone the seller appoints.
A formal entry needs a customs bond (19 CFR 142.4), and every importer files CBP Form 5106 to get an importer number (19 CFR 24.5). A company incorporated outside the United States can enter goods for consumption only through a resident agent in the state where the port is, and with a bond from a US resident surety (19 CFR 141.18).
The entry declares the value of the goods, which is not the delivered price. International freight and insurance are left out of that value, and duty built into a delivered price comes off it only when it is shown separately (19 U.S.C. 1401a). CBP has ruled that where a foreign importer of record sells on DDP terms, a general line on the invoice saying duty is included is not enough (HQ H301048).
An executive order of 3 June 2026 (91 FR 35125) names undervaluing imports among the practices it targets, and directs the Department of Homeland Security to revise within 180 days the rules on who may act as importer of record, with stricter bond and broker requirements for importers of record based outside the United States. Separately, from 18 September 2026 CBP voids importer numbers whose Form 5106 details are incomplete or inaccurate (91 FR 53627).
So on any delivered duty paid quote, ask who will be the importer of record, whether that company is based in the United States and holds a bond, and what value the entry will declare. If the answers stay vague, a DAP price still brings the goods to your door, and the entry is then filed in your name, where you can see it.
Working with us
What a quote from us shows
Our quotes are laid out so you can hold them up against the tables on this page.
Who you are buying from
Every quote names one of two arrangements, seller of record or buying agent, and names the company that will invoice you at the top, before the first line.
Each line on its own
A landed quote shows the goods, haulage, export clearance, the ocean leg, the customs entry, duty and delivery as separate lines, on the terms written on the quote.
The duty line
It names the tariff line, the rate we quoted against and which party carries a change before entry.
Full containers, or a trial quantity
Full containers are the norm. A trial quantity can ship as less than a container load, and the quote then shows the cost per unit both ways, side by side.
Read on
Where to go next
- Landed cost calculatorAdd up the lines a term leaves to you
- Shipping and dutiesWhat each line of a landed quote covers
- How we workWho invoices you, and who carries a tariff change
- Paying a supplier in ChinaTrade terms and payment terms are different clauses
Questions
Questions buyers ask
Is DDP the same as FOB?
No. FOB ends when the goods are on board the ship in China. DDP ends at your door, with the goods cleared through US customs and the duty paid. The difference is everything in between, and the line by line table shows which lines that takes in.
Who pays for shipping if it is FOB?
The seller pays to get the goods to the port of loading, cleared for export and on board. You pay the ocean freight and everything after it: insurance if you want it, the entry, duty and delivery. When a quote from China reads FOB followed by the name of a port, that is the port where the goods are loaded.
Are EXW and FOB the same?
No. Under EXW you collect the goods at the seller's door, so the loading, the haulage to the port and the export declaration in China are yours to arrange. Under FOB the seller takes care of those and hands the goods over on board the ship.
Who pays the freight on CIF?
The seller pays the ocean freight to your port and buys minimum insurance cover for you. The risk is still yours from the moment the goods are on board in China, and charges at your port outside the freight contract are yours as well. For a container that moves on inland, CIP is the rule written for that trip.
What is the difference between DDP and DAP?
Import clearance and duty. Under DAP the seller delivers to the named place, and you clear the goods and pay the duty. Under DDP the seller does both, and the seller, or someone it appoints, is the importer of record.
Is DDP shipping illegal?
No. DDP is one of the eleven Incoterms® rules. What deserves a close look on a DDP quote is who acts as importer of record and what value the entry declares, which the section on the importer of record covers.
Is DDP more expensive than FOB?
A DDP price takes in lines you would otherwise pay one by one: the ocean leg, the entry, the duty and the delivery. So compare the two on landed cost per unit rather than on the price at the top. The landed cost calculator adds up the lines an FOB price leaves to you.
Does the trade term decide when the goods become mine?
No. A trade term settles costs, risk and customs, and leaves ownership alone. When title passes, and when you pay, are set in the sales contract.
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