FOB vs CIF vs DDP: Essential 2026 Buyer Guide (Incoterms 2020)

FOB vs CIF vs DDP is the most common Incoterms question for Bangladesh garment shipments—this guide shows who pays what and where risk transfers.

Bangladesh Garments • Incoterms 2020 • Last updated: Feb 2026

Who pays, who insures, who clears customs — and exactly where risk transfers.

FOB: Buyer books freight. Risk transfers when goods are on board the vessel at the export port.
CIF: Seller arranges sea freight + minimum insurance. Risk transfers earlier than most buyers expect.
DDP: Seller delivers with duties paid — usually risky unless the seller can legally handle import clearance.

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Note: Incoterms define delivery, cost, and risk responsibilities — they don’t replace a sales contract or payment terms.

FOB and CIF are sea/inland-waterway rules. For air shipments, use FCA/CPT/CIP/DAP/DDP (depending on who pays freight and where delivery happens).

Choose your Incoterm in 60 seconds

Use this quick guide first. Then scroll for the full comparison table + Bangladesh examples.

BEST DEFAULT

FOB

Choose FOB when the buyer wants control of freight. Seller delivers on board the vessel at the export port.

SELLER ARRANGES SEA

CIF

Choose CIF when you want the seller to book sea freight + provide insurance. Risk transfers at shipment (not at destination).

USE WITH CAUTION

DDP

Choose DDP only if the seller can legally handle import clearance and duties in the buyer’s country.

FOB vs CIF vs DDP: side-by-side comparison

This table is written for Bangladesh garment shipments. Always specify the named place and Incoterms 2020 on your PO/contract.

Topic	FOB	CIF	DDP
Best for	Buyer wants to control freight and insurance.	Buyer wants seller to arrange sea freight + insurance.	Buyer wants delivered price incl. duties (only if seller can legally do import).
Seller delivers when	Goods are on board the vessel at the export port.	Goods are on board the vessel at the export port.	Goods are placed at buyer’s disposal at the named destination, import cleared, ready for unloading.
Risk transfers when	When goods are on board at the export port.	When goods are on board at the export port (not at destination).	At the named destination when goods are delivered as above.
Main carriage cost (ocean freight)	Buyer	Seller	Seller
Insurance	Buyer arranges insurance (recommended).	Seller provides insurance (typically minimum cover).	No insurance requirement in DDP; seller often insures because the seller carries risk until delivery
Export clearance (Bangladesh)	Seller	Seller	Seller
Import clearance + duties/taxes	Buyer	Buyer	Seller (this is the big risk area)
What to write (examples)	FOB Chattogram Port, Incoterms 2020	CIF Rotterdam, Incoterms 2020	DDP Buyer Warehouse (full address), Incoterms 2020

Bangladesh garment shipping examples (EU / UK / US)

These are practical examples you can copy into a PO. Always include the named place and Incoterms 2020.

EU buyer (common)

Use: FOB Chattogram Port, Incoterms 2020

Seller: produces + packs + export clearance + delivers on board at Chattogram.
Buyer: books ocean freight, insurance, and handles EU import clearance + duties/taxes.
Why buyers choose it: maximum control over shipping cost, routing, and insurance.

UK buyer (seller books sea)

Use: CIF Felixstowe, Incoterms 2020 (example destination port)

Seller: books ocean freight + provides insurance (typically minimum cover).
Buyer: handles UK import clearance, duties/VAT, and inland delivery.
Watch-out: risk transfers at shipment (not when the goods arrive in the UK).

US buyer (delivered price request)

Use only if feasible: DDP Buyer Warehouse (full address), Incoterms 2020

Seller: responsible for import clearance and duties/taxes in the US.
Buyer: receives goods at the named destination, ready for unloading.
Reality check: agree to DDP only if the seller can legally manage US import clearance via a broker/partner.

Buyer checklist (copy/paste)

Use this checklist to avoid misunderstandings. Copy it into your email/PO and fill the blanks.

Copy/paste template (PO / email)

Incoterm: [FOB / CIF / DDP] [Named place], Incoterms 2020

Named place (exact): [e.g., Chattogram Port / Rotterdam / full warehouse address]
Exporter (Seller): [Company name, address]
Importer of record (Buyer/Seller): [Buyer or Seller]

Main carriage (ocean/air) booked by: [Buyer/Seller]
Insurance arranged by: [Buyer/Seller] — coverage: [minimum / enhanced] — insured party: [Buyer/Seller]

Export clearance (Bangladesh): Seller
Import clearance + duties/taxes: [Buyer/Seller] — broker: [Buyer/Seller + broker name if known]

Documents required: [Commercial invoice, Packing list, B/L or AWB, COO, test reports if any]
Destination charges (THC/handling) paid by: [Buyer/Seller] (confirm)
Demurrage/detention risk owner: [Buyer/Seller] (confirm)

Delivery schedule: ETD [date] / ETA [date]
Payment terms: [TT/LC/etc.] — inspection: [yes/no] — quality/claims window: [days]

Quick checks before you confirm any Incoterm

Is the named place specific enough (port name or full delivery address)?
Do both sides agree on when risk transfers?
Who pays destination charges (THC/handling) and who carries demurrage/detention risk?
Who is the importer of record (especially important for DDP)?
Are insurance coverage and insured party clearly stated (especially for CIF)?

FAQ: FOB vs CIF vs DDP (Bangladesh garments)

These answers cover the most common buyer misunderstandings on apparel shipments.

Does CIF mean the seller carries risk until the goods arrive?

No. Under CIF, the seller pays for sea freight and provides insurance, but risk transfers at shipment (when the goods are on board at the export port), not at destination.

What insurance does CIF include?

CIF requires the seller to provide insurance, but it is typically minimum cover. Buyers should request higher coverage if needed and confirm who is insured.

Can I use FOB for container shipments?

Many buyers still write FOB for containers, but FCA is usually the better fit for containerized shipments because handover often happens at the terminal/carrier (before loading on board). If your bank/LC needs an “on-board” bill of lading, use FCA and agree the buyer will instruct the carrier to issue an on-board B/L to the seller.

What should I write as the “named place”?

Be specific. Use a real port or a full delivery address. Examples: FOB Chattogram Port, Incoterms 2020 or DDP [full warehouse address], Incoterms 2020.

Who pays destination charges (THC/handling) under CIF?

It depends on the contract and local port practices. Don’t assume—confirm in writing who pays destination charges, and who carries demurrage/detention risk.

Why is DDP risky for garments?

DDP makes the seller responsible for import clearance and duties/taxes in the buyer’s country. Only use DDP if the seller can legally manage import clearance (often via a broker/partner) and you’ve confirmed the real landed-cost structure.

Do Incoterms cover payment terms or product quality?

No. Incoterms cover delivery responsibilities, costs, and risk transfer. Payment terms, inspection, quality claims, and penalties should be defined separately in the contract/PO.

Sources & methodology

Last updated: Feb 2026. This page summarizes Incoterms responsibilities (delivery point, cost allocation, and risk transfer). Always confirm details in your PO/contract and with your freight forwarder/customs broker.

Spotted an issue? If you notice anything unclear or wrong, message me and I’ll update this page.

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