FOB vs CIF vs DDP: Questions for US Import Buyers

Incoterms allocate specified delivery responsibilities, costs and risk between seller and buyer. They do not replace the full sales agreement. Trade.gov’s overview explains the framework and distinguishes rules by transport mode. FOB and CIF are intended for sea and inland waterway transport; DDP is a rule for any mode. Do not write only three letters on a purchase order. Identify the named port or place and the agreed version, then check that the rule fits how cargo will actually move. For containerized or multimodal movements, discuss suitable alternatives with the logistics adviser rather than forcing a familiar abbreviation.

A seller arranging freight does not necessarily retain risk until the buyer receives the goods. That distinction is especially important when comparing CIF with an arrival-based expectation. Ask where delivery and risk transfer occur under the agreed rule, who contracts transport and what insurance is actually provided. For DDP, verify whether the seller can lawfully perform the promised import formalities and identify the importer arrangement. A promise that duties are included is not enough if nobody can explain the entry. Confirm unloading and destination charges rather than assuming every quoted service includes them.

Build a worksheet listing product price, origin handling, freight, insurance, customs, destination handling and inland delivery. Mark the responsible party for each line and flag anything unquoted. Add payment terms separately because delivery rules do not themselves define when the invoice is paid or transfer every ownership right. A hypothetical cheap FOB quote can become expensive after missing destination charges are added. Equally, a higher DDP quote needs evidence of a workable customs arrangement. Use the actual contract and authoritative rule text for the final decision, with specialist review where needed. The comparison should reveal responsibility gaps before the shipment leaves.