Terms Transparency
One shipment. Who is responsible for what?
Different incoterms define who handles cost, risk, customs, and duties. Adding DAP makes the boundary between destination delivery and duty-paid delivery much clearer.
Quick Comparison
Start with cost, risk, and customs responsibility
| Item | DDP | DAP | DDU | CIF | FOB | EXW |
|---|---|---|---|---|---|---|
| Export Clearance | Seller | Seller | Seller | Seller | Seller | Buyer |
| International Freight | Seller | Seller | Seller | Seller | Buyer | Buyer |
| Insurance | Arranged by seller | Arranged by seller | Arranged by seller | Min 110% value | Buyer arranges | Buyer arranges |
| Import Clearance | Seller | Buyer | Buyer | Buyer | Buyer | Buyer |
| Import Duties/Taxes | Seller pays | Buyer pays | Buyer pays | Buyer pays | Buyer pays | Buyer pays |
| Final Delivery | Door-to-door | Named destination | Door* | To port only | To vessel only | Factory pickup |
| Risk Transfer | At destination | At destination before unloading | At destination | On board at origin | On board at origin | At factory/warehouse |
| Best for | Buyers wanting turnkey delivery | Buyers wanting seller-arranged delivery but own duty handling | Importers with brokerage who want to manage clearance | Importers with customs capability | Importers with own forwarder | Buyers with full China pickup capability |
* DDU is an older usage. For formal documents, prefer DAP and define import clearance and duty responsibility explicitly.
Detailed Explanation
Six terms, explained without the jargon
- DDP - Delivered Duty Paid
- Seller bears the main costs and risks from China export to the buyer's named address, including export clearance, international freight, import clearance, duties, taxes, and final-mile delivery.
- Best for: e-commerce sellers, small-to-medium importers, buyers unfamiliar with customs, and projects needing all-inclusive pricing.
- Note: first confirm the seller can legally complete import formalities in the destination country. Estimated duties still depend on HS code, declared value, and customs valuation.
- DAP - Delivered at Place
- Seller arranges transport to the named destination place, but the buyer handles import clearance, duties, and taxes. Unlike DDP, DAP delivers the shipment without seller-paid duties.
- Best for: buyers who want seller-arranged delivery to a door or warehouse, but prefer to use their own importer record, broker, or duty payment setup.
- Note: customs clearance, import taxes, inspection costs, and duty delays remain the buyer's responsibility. The named destination should be written clearly.
- DDU - Delivered Duty Unpaid
- DDU is an older term often used to mean seller delivery to destination without import clearance or duties. In formal Incoterms 2020 documents, DAP is usually the better replacement.
- Best for: importers with local customs brokers who want to control duty declarations.
- Note: if DDU is still used, define clearance, tax, delivery, storage, and inspection responsibility explicitly.
- CIF - Cost, Insurance and Freight
- Seller pays freight to destination port plus minimum insurance. Buyer handles destination charges, import clearance, and delivery.
- Best for: traditional importers with port clearance capability, commodity traders, and FCL shipments.
- Note: CIF only covers minimum insurance. Destination charges such as THC, deconsolidation, and storage are usually buyer's responsibility.
- FOB - Free On Board
- Seller delivers goods onto the buyer-nominated vessel and completes export clearance. Costs and risks after loading transfer to the buyer.
- Best for: importers with established forwarder or carrier relationships who want transport control.
- Note: buyer must arrange booking, insurance, destination handling, and downstream delivery.
- EXW - Ex Works
- Seller makes goods available at the factory or warehouse. Buyer handles all transport, export/import clearance, insurance, and costs from that point.
- Best for: buyers with China-based purchasing teams or complete China pickup and export logistics capability.
- Note: without China pickup and export clearance resources, EXW can create hidden cost and compliance risk.
FAQ
Four questions to ask before choosing a term
- What is the difference between DAP and DDP?
- DAP delivers to the named place, but the buyer handles import clearance and duties. DDP includes import clearance, duties, taxes, and delivery under the seller's responsibility.
- Can I still use DDU?
- DDU is still used in practice, but it is not a formal Incoterms 2020 term. For formal contracts, use DAP and define customs and duty responsibility clearly.
- What's the core difference between CIF and DDP?
- CIF delivers to the destination port only; the buyer handles clearance and delivery. DDP delivers to the consignee's door with most steps managed by the seller.
- Why does FOB look so much cheaper than DDP?
- FOB only covers part of the origin-side cost up to loading. DDP includes international freight, import clearance, duties, taxes, and final-mile delivery. Compare landed cost.