What is the difference between DDP and FOB transportation?

1. DDP (Delivery to destination)
DDP is the abbreviation for "Delivered Duty Paid", which means "Delivered Duty Paid at the destination.". In DDP transportation, the seller is responsible for delivering the goods to the buyer's designated destination and bearing all transportation related costs and responsibilities, including tariffs, import taxes, transportation costs, etc. In short, a DDP contract means that the seller bears the risks and costs of the entire transportation process of the goods from the origin to the destination.
2. FOB (Free on Board)
FOB stands for "Free On Board", which means "Free on Board". In FOB transportation, the seller is responsible for delivering the goods to the designated loading port and bearing the cost and responsibility of loading the goods onto the vessel. Once the goods are delivered to the loading port and loaded onto the vessel, responsibility shifts to the buyer. The buyer is responsible for the transportation, insurance, customs duties, and other costs and risks of the goods.
3. Comparison of Differences
Responsibility allocation:
In DDP transportation, the seller bears the costs and risks of the entire transportation process from the origin to the destination, including tariffs, transportation costs, etc. In FOB transportation, the seller's responsibility is limited to delivering the goods to the designated loading port and being responsible for loading the goods onto the vessel.
Cost bearing:
In DDP transportation, the seller bears all transportation related expenses, including freight, customs duties, import taxes, etc. In FOB transportation, the buyer is required to bear all costs from the loading port to the destination, including transportation fees, insurance fees, customs duties, etc.
Risk transfer:
In DDP transportation, the ownership and risk of the goods are always borne by the seller during the transportation process until the goods are delivered to the destination designated by the buyer. In FOB transportation, once the goods are delivered to the loading port and loaded onto the vessel, the responsibility shifts to the buyer, who is responsible for any loss or damage during the transportation of the goods.
Applicable situation:
DDP transportation is usually suitable for sellers who have a deeper understanding of the international trade market and destination, and can effectively handle import procedures and tax affairs at the destination. FOB transportation is usually suitable for situations where the buyer has stronger logistics and transportation resources, and can better control the transportation process of goods.