FOB vs CIF vs DDP: which shipping term suits a console importer?
By Tech Trove · Updated · 4 min read
Quick answer
Under FOB the buyer arranges and pays for the main freight. Under CIF the seller pays freight and insurance to the named destination, and the buyer handles import clearance. Under DDP the seller delivers to the door and pays the duty and tax. FOB suits importers with their own forwarder, CIF suits most regular importers, and DDP suits buyers who want one all-in price.
How do FOB, CIF and DDP compare?
| FOB | CIF | DDP | |
|---|---|---|---|
| Who books main freight | Buyer | Seller | Seller |
| Who pays cargo insurance | Buyer, if wanted | Seller | Seller |
| Who clears import customs | Buyer | Buyer | Seller |
| Who pays import duty and tax | Buyer | Buyer | Seller |
| Where risk passes to the buyer | On board at origin | On board at origin | At delivery |
| Cost you can see up front | Goods only | Goods, freight, insurance | Everything to the door |
Which term should you choose?
We can price more than one term on the same quote so you can compare them side by side.
- Choose FOB if you already have a forwarder with good rates and want control of the freight.
- Choose CIF if you can clear customs at the destination and want the freight handled for you. This is the most common choice for regular importers.
- Choose DDP if you are new to importing into that country, or want a single landed price with no customs work.
Does CIF mean you are covered until the goods arrive?
Not quite. This is the most misunderstood part of CIF. The seller pays for freight and insurance to the destination, but risk passes to the buyer once the goods are on board at origin. If cargo is damaged on the way, you claim on the insurance policy. Under Incoterms 2020 the CIF minimum is Institute Cargo Clauses (C), which covers named risks only. For high-value electronics, ask for the cover to be stated on the quote.
Can CIF be used for air freight?
Strictly, no. Incoterms 2020 define FOB and CIF for sea and inland waterway transport, and CIP is the matching term for air and other transport. In day-to-day trade, buyers and sellers still commonly say CIF for air shipments. What counts is that your contract states exactly what is included and where risk passes, so check the wording rather than relying on three letters.
What are the risks with DDP?
DDP makes the seller responsible for import clearance, which is not possible in every country or for every product, and the price has to allow for that work. Reclaiming import VAT can also be harder for the buyer, because the seller is the importer. Ask who will be named as importer of record before you agree.
Common questions
What is the difference between CIF and CIP?
CIF is defined for sea and inland waterway transport, while CIP works for any transport, including air. Under Incoterms 2020, CIP also requires a higher minimum insurance cover, Institute Cargo Clauses (A), compared with Clauses (C) for CIF.
What is the difference between DDP and DAP?
Both deliver to the named place. Under DAP the buyer clears import customs and pays the duty and tax. Under DDP the seller does.
Which shipping terms does Tech Trove offer?
FOB Toronto, CIF DAFZA (Dubai Airport Freezone), CIF to your port or airport, and DDP to your door, quoted per customer.
Sources
This guide is general information, not legal or customs advice. Rates and rules change, so confirm the details with a licensed customs broker or your freight forwarder before you ship.