DDP vs FOB: who pays what

DDP is Delivered Duty Paid. FOB is Free On Board. Incoterms 2020.

The difference that matters

Full cost split

Cost blockDDPFOB
Export clearanceSellerSeller
Carriage to port / terminalSellerSeller
Loading onto main carriageSellerSeller
Main carriage (freight)SellerBuyer
InsuranceNeither obligedNeither obliged
Unloading at destinationBuyerBuyer
Import clearanceSellerBuyer
Duties and import taxesSellerBuyer
Risk passesAt the named destination, ready for unloading, after import clearance.When the goods are loaded on board the ship.
Transport modeAny modeSea / inland waterway

What people get wrong

DDP

Many countries will not let a non-resident seller act as importer of record, and unrecoverable import VAT quietly becomes a cost.

FOB

Routinely misused for containers. A container is handed over at a terminal days before loading, so the seller keeps risk they think they have shed.

Questions

What is the main difference between DDP and FOB?
They split 3 cost blocks differently. main carriage (freight) falls to the seller under DDP and the buyer under FOB; import clearance falls to the seller under DDP and the buyer under FOB; duties and import taxes falls to the seller under DDP and the buyer under FOB.
Where does risk pass under DDP?
At the named destination, ready for unloading, after import clearance.
Where does risk pass under FOB?
When the goods are loaded on board the ship.
Can DDP and FOB both be used for container shipments?
DDP works for any mode of transport. FOB is written for sea and inland waterway transport only.

Whichever term you agree, the paperwork has to say so

The Incoterm and named place belong on the commercial invoice, the packing list and the shipper's instructions — spelled the same way on each. ovrseas generates the set from one entry so they cannot disagree with each other.

Commercial invoice template

Compare other pairs

CFR vs DDPCFR vs FOBCIF vs DDPCIF vs FOBCIP vs DDPCIP vs FOBCPT vs DDPCPT vs FOB

Incoterms® is a registered trademark of the International Chamber of Commerce. This page is an independent summary of how costs and risk are allocated and is not affiliated with or endorsed by ICC. For contract drafting, use the official Incoterms® 2020 rules published by ICC.