In 2025, due to changing market dynamics and the uncertainty of Trump's tariffs, we recommend that more sellers transition from FOB to DDP.

At the same time, also in the case of the U.S. imposed 125% tariffs on China, some U.S. companies have also asked Chinese suppliers to shift from FOB terms to DDP terms, which is reflected behind the essence of the risk and responsibility redistribution.

DDP (Delivered Duty Paid) is a kind of Incoterms, in which the seller bears the greatest responsibility for transporting the goods from the place of shipment to the buyer's designated destination and bears the costs and risks of the whole process, including transportation, insurance, export/import customs clearance, customs duties, taxes and fees. The buyer shall be responsible for the transportation of the goods from the place of origin to the destination specified by the buyer and shall bear all costs and risks including transportation, insurance, export/import customs clearance, duties, taxes, etc.

The buyer only has to sign for the goods when they arrive at the designated place, without paying any additional fees.

DDP is applicable to all modes of transportation (sea, air, road, etc.), but the specific place of delivery (e.g. “DDP Shanghai”) must be specified in the contract.

Why DDP is not friendly to factories/sellers?

The seller's responsibility needs to cover almost all aspects: export packaging, transportation arrangements, export/import customs clearance, payment of duties and taxes, and risks prior to unloading at destination. For example, if the goods are damaged or lost in transit, the seller is liable.

Risk passes to the buyer when the goods are delivered to the buyer's designated place and unloaded. Until then, the seller is responsible for all transportation and customs delays or accidental damage.

Why Factories and Sellers Should Transition from FOB to DDP in 2025

Changing Market Demand & Buyer Preferences

Buyers today prioritize hassle-free and transparent DDP terms that eliminate customs complexities, tax risks, and logistics burdens. This trend is particularly pronounced in high-tariff or compliance-sensitive industries such as electronics and textiles. Additionally, as sellers expand into emerging markets like Southeast Asia and the Middle East, DDP simplifies cross-border processes, making sellers more competitive in regions that favor one-stop solutions.

Cost and Risk Management Advantages

By consolidating logistics, tariffs, and taxes into fixed pricing, DDP provides cost predictability and shields sellers from volatile factors such as tariff hikes, like the U.S.-China tariffs rising to 125% in 2025. Furthermore, DDP reduces buyer default risks, which are common under FOB terms where buyers handle post-shipment logistics. Delays or geopolitical disruptions, such as the Russia-Ukraine conflict, often lead to abandoned cargo. DDP ensures sellers retain control until delivery, minimizing such risks.

Profitability and Pricing Power Enhancement

Sellers can optimize margins by leveraging economies of scale in logistics, such as multi-modal transport and streamlined customs processes. Case studies have shown that Chinese manufacturers adopting DDP have doubled their profits by reducing costs and improving efficiency. Offering DDP also serves as a service differentiator, positioning sellers as end-to-end partners and attracting premium clients. This is particularly beneficial in e-commerce, where DDP aligns seamlessly with direct-to-consumer (DTC) models.

Adapting to Global Trade Policy Shifts

Stricter compliance requirements, such as EU forced labor bans and U.S. BIS export controls, demand expertise in customs compliance. DDP sellers mitigate these risks by employing specialized teams to handle regulatory challenges. Additionally, supply chain resilience becomes crucial amid disruptions like Red Sea crises and port congestion. DDP enables proactive solutions such as overseas warehousing and multi-modal routing, ensuring smoother operations despite external disruptions.

Digital Transformation and Technology Enablement

Platforms like FreightAmigo provide end-to-end visibility, allowing sellers to track shipments, tariffs, and compliance status in real time, reducing operational blind spots. Automated tax compliance tools, such as VAT deferral systems and AI-driven duty calculators, further minimize errors in cross-border tax management, streamlining operations for sellers.

Challenges and Mitigation Strategies

Cash flow pressure is a common concern because DDP requires prepayment of customs duties and shipping costs. Sellers can mitigate this by entering into staged payment agreements with logistics partners or utilizing supply chain financing solutions.

Complex customs procedures are another hurdle, but working with local intermediaries in regions such as the EU or Russia, or using platforms such as Amazon's Global SPN, can help sellers cope with regulatory requirements. To avoid disputes, sellers must also ensure contractual clarity on delivery timeframes, cost allocations and force majeure clauses in case of unforeseen policy changes.

You can also contact us to utilize FTZ Warehouse to store your goods. At FTZ Warehouse, goods do not have to go through the formal customs declaration process when they are first warehoused, and tax deferrals, potential tax reductions and tax savings can be offered for your goods.

DDP vs other terms

DDP vs DAP

DAP (Delivered At Place): The seller is responsible for transportation to the destination, but the buyer is responsible for import customs clearance and taxes.

DDP is more responsible for import duties and customs clearance than DAP.

DDP vs DDU

DDU (Delivered Duty Unpaid): The seller is only responsible for transportation to the destination, and the buyer pays import duties and taxes.

DDP vs CIF

CIF (Cost, Insurance, Freight): the seller bears the freight and insurance to the destination port, but the buyer is responsible for the import tax and subsequent transportation.