DDP is the easiest quotation to read and the hardest to verify. One price, goods delivered to your warehouse, duty paid, nothing for you to arrange. What it does not tell you is who declared the goods to customs, what they said they were worth, and whether you could prove any of it if you were asked.
That sounds like a technicality until the year you are asked.
What the two terms actually commit the seller to
Under Incoterms 2020, FOB means the seller delivers the goods on board the vessel at a named port of shipment. Risk and cost pass to you at that point: you book the main carriage, you pay the freight, you clear the goods at destination, and you are the importer.
DDP sits at the opposite end. The seller delivers the goods to a named destination, cleared for import, with duty paid. It is the maximum obligation the seller can take on, and on paper it is the buyer-friendly term.
Neither term decides who owns the goods — that is a matter for your contract, not for Incoterms, and we cover the general comparison in Incoterms for China imports. What DDP decides is who deals with customs. And customs is not a service that can simply be performed on your behalf without anybody being named.
The question a DDP quote does not answer
Every import entry has an importer of record. That is not a piece of paperwork; it is the party the customs authority holds responsible for declaring the right classification, declaring the right value, paying the right duty, and keeping the records afterwards.
A foreign company can be the importer of record in the United States. It is entirely legitimate: the entity files a CBP Form 5106 to obtain an importer number and posts a customs bond as security for the duties. Some large Chinese exporters do exactly this, and their DDP quotes are real.
The cheap DDP quote is usually not that. More often the goods clear under an arrangement you never see — a third party's bond, a consolidated entry, a broker relationship that exists between the freight agent and somebody else entirely. The goods arrive, the price was what they said, and there is no document in your possession that describes what was declared.
What you lose when you cannot see the entry
- Proof of what was declared. The entry summary is the document that records the classification, the value and the duty paid. Without it you are taking the arrangement on trust.
- The ability to check the duty. You cannot confirm that the classification matches your product or that the value matches what you paid, which means you cannot tell whether the duty in your DDP price bears any relationship to the duty that was owed.
- Any route to a refund. Protests, post-entry corrections and duty drawback all run through the importer of record. If that is not you, those doors are not yours to open.
- Your records. In the United States an importer must keep entry records for five years from the date of entry under 19 CFR Part 163, and the penalties for not producing them are per entry, not per audit. If you are the importer you need those documents. If you are not, you cannot produce them either.
The uncomfortable part: being invisible on the entry is not the same as being uninvolved. Customs authorities can and do look through to the party that actually bought and received the goods. A low declared value is not a problem you have successfully outsourced.
The arithmetic that tells you something is wrong
You do not need access to the entry to sanity-check a DDP price. You need the FOB price for the same goods and about ten minutes.
- Take the DDP price and subtract the FOB price. The difference is everything the seller is covering: ocean freight, destination handling, clearance, duty, and the last mile.
- Work out the freight side yourself. Our published rates are a reasonable starting point, and they are in the LCL and FCL guide.
- Work out the duty. Find the classification, apply the general rate and any additional tariffs that apply to Chinese-origin goods in your category, and calculate it on the real transaction value.
- Compare. If the gap between DDP and FOB is smaller than freight plus duty alone, the duty is not being paid on the value you paid.
On many categories of Chinese-origin goods entering the United States the additional tariffs are large enough that this test is not subtle. When a DDP quote sits only a little above FOB on a category carrying a significant tariff, the arithmetic is telling you something specific, and the right response is a question rather than an accusation.
The landed cost calculator does steps two and three for you, with every rate we apply published rather than described. It will not tell you what your supplier declared. It will tell you what a compliant entry should have cost.
What to ask for, in writing
Five questions, before the goods ship. A seller running a legitimate DDP programme can answer all of them in a sentence each.
- Who is the importer of record, by name and importer number?
- Will I receive a copy of the entry documents after clearance?
- What classification will be declared for this product?
- What value will be declared?
- Who files the advance security filing, and under whose bond?
If the answers are vague, that is itself an answer. It does not necessarily mean anything improper is happening — it frequently means the seller genuinely does not know, because the clearance is subcontracted two steps down a chain they do not control. Either way, you now know how much of the arrangement is visible to the person you are paying.
The European and British version of the same question
The mechanics differ but the question does not. Under the Union Customs Code the declarant must generally be established in the customs territory of the Union, so a Chinese seller cannot simply declare goods into the EU in its own name. It must appoint an indirect representative established in the Union, and that representative is jointly and severally liable for the customs debt and the import VAT.
That liability is the reason genuine DDP into Europe costs real money, and the reason many forwarders will not offer it at all. A very cheap DDP price into the EU is therefore worth the same scrutiny as a very cheap one into the United States.
There is also a VAT consequence that catches first-time importers. Reclaiming import VAT depends on being the party that imported the goods and holding the import document that evidences it. If the seller or its representative is named as importer and you never receive that document, the VAT you assumed was recoverable may not be.
When DDP is a reasonable choice
None of the above makes DDP wrong. It makes it a term you should buy deliberately rather than by default.
It is a sensible choice for samples and small parcels, where the duty is trivial and the administrative saving is real. It is sensible for a first test order where you want to see the product moving before you build any import infrastructure. And it is sensible whenever the premium is one you have looked at and accepted, rather than one you assumed was free.
It is also worth distinguishing the version that is not really the same thing: an arrangement where your own forwarder handles clearance and delivery with you named as importer of record. Commercially that feels like DDP. Legally it is closer to DAP with a clearance service attached, and it keeps the entry, the documents and the refund rights on your side. If what you want is the convenience, this is usually the way to buy it.
A reasonable default
For most buyers importing repeatedly, FOB at a named Chinese port is the better default. You see the real freight cost instead of an unspecified share of one number. You control the routing, which matters more than most buyers expect once you understand what transit times are actually made of. You are the importer of record, which means the entry, the classification and the duty are yours to inspect and yours to correct. And when you compare two suppliers, you are comparing the goods rather than two different bundles of logistics.
The trade-off is that you have to arrange the rest of the chain. That is the part we do: we quote FOB, or we quote delivered with you named as the importer of record and the entry documents sent to you after clearance. Both of those you can audit. We do not offer the third version, and if a quotation you have received elsewhere is materially cheaper than ours on a tariffed category, the difference is worth understanding before you accept it.
The freight itself runs through our freight and customs service, and the classification question behind the duty calculation is covered in import duty classification basics.
