DDP or FOB: which term actually costs you less when you buy from China
This is not really a question about price. It is a question about who clears customs, who carries the risk in transit, and whether you have an import entity at the other end.
What the two terms actually say
| FOB — Free On Board | DDP — Delivered Duty Paid | |
|---|---|---|
| Risk passes | When the goods are on board the vessel at the port of loading | When the goods reach the named place in your country |
| Main sea freight | You book and pay | Seller books and pays |
| Marine insurance | Yours to arrange | Seller's, in practice |
| Import clearance | You, as importer of record | Seller, through their broker |
| Duty and import VAT | You pay | Seller pays, and prices it in |
| Final delivery | You arrange | Included to the named address |
| What you can see | Every cost line separately | One number |
FOB stops at the rail of the ship in Ningbo. DDP ends at your door with the duty already paid. Everything between those two points is the negotiation.
The rule that decides it
If you have an import entity, a customs broker and a freight forwarder — in other words if you are a wholesaler, a distributor or a brand that already imports — take FOB. You will almost always land the goods cheaper, because you are buying freight at your own rates instead of at the factory's marked-up rates, and because you can see every cost line.
If you are selling direct to consumers, dropshipping, or you have no import entity in the destination country, DDP is not the cheaper option — it is the only option. Without an importer of record the goods cannot clear customs, and that is a legal fact, not a commercial preference.
What FOB hides
FOB looks clean and is not always complete. Origin charges — terminal handling, documentation, customs declaration at the Chinese end — are normally the seller's under FOB, but some quotations quietly push them to you. Ask explicitly whether the FOB price includes origin THC and export declaration.
The second gap is the port. FOB Ningbo and FOB Shenzhen are not the same quotation, and an inland factory quoting FOB from a distant port is including several hundred dollars of trucking in the unit price.
What DDP hides
The duty rate. In a DDP price the duty and import VAT disappear into one figure, and you lose the ability to check whether they were calculated on the right HS code and the right customs value. If the rate is later corrected upwards, the argument happens after the goods have been sold.
Standing with customs. Under DDP the seller — or more often the seller's broker — is the importer of record. If the shipment is held for inspection, you are not the party customs will talk to.
VAT registration. In the EU in particular, a seller outside the union cannot normally recover or properly account for import VAT, which is why a large share of 'DDP to Europe' is handled through arrangements you would not want to inherit. If you buy DDP into the EU, ask who the importer of record is and under whose VAT number the goods are entering.
How we quote, and why
We quote FOB Ningbo in USD as standard. For a business buyer that is the honest term: you see the goods price without freight folded into it, you control the shipping, and the risk boundary is a documented moment rather than a promise.
We will quote DDP where the shipment genuinely needs it — a first small order going to a brand with no import operation, or a direct-to-consumer seller. What we will not do is quote DDP as a way of hiding the goods price.
Two intermediate terms are worth knowing about. CIF puts freight and insurance to the destination port on the seller while leaving clearance and duty with you — useful for a first order if you have an entity but not yet a forwarder. EXW puts everything on you from the factory gate and is almost never worth the administrative cost from China.
Before you compare two quotations
- Check they are the same term and the same port.
- Check whether origin charges are in or out.
- For DDP, ask for the HS code the seller is declaring under, and who the importer of record will be.
- For FOB, get the carton dimensions and pieces per cubic metre so your forwarder can quote the freight leg accurately.
A FOB price that looks 8% higher than a DDP price is frequently the cheaper landed cost once the freight is booked at your own rates.