Explainer
FOB, DDP, and who owns the goods in transit
Incoterms decide three separate things at once: who pays for transport, who carries the risk of loss, and at what moment the goods stop being the seller's problem. In apparel the two that dominate are FOB and DDP, and the difference between them shows up in every dispute about a shipment.
By The Retail Ledger · September 27, 2026
FOB
Under FOB, free on board, the seller delivers the goods onto the vessel at the named port of origin. From that point the buyer pays freight and insurance and carries the risk. Practically, an apparel importer buying FOB is running its own logistics: it books the freight, it has visibility of the container, and it takes the consequence of delay or damage in transit.
That visibility cuts both ways. It gives the buyer control and evidence, and it means a problem discovered at the destination is presumptively the buyer's unless it can show the goods left the origin already wrong.
DDP
Under DDP, delivered duty paid, the seller carries everything to the named destination, including duties. The buyer sees a single landed price and no logistics. It is simpler and, for that reason, common among smaller importers.
The trade is information. Under DDP the buyer usually has no direct relationship with the carrier, no independent view of what was loaded, and less documentary evidence of what happened between origin and dock.
Why the transfer point matters in a dispute
A shipment discrepancy claim is an argument about when and where a difference arose. The incoterm sets the baseline for that argument by fixing the moment risk transferred. It does not decide whether the goods matched their description, which is a separate question governed by the order and any inventory file attached to it, as in ATS lists.
In domestic closeout transactions incoterms are often replaced by a simple delivery term, but the same logic applies: the contract names a moment, and a buyer's ability to contest what arrived usually depends on what it can document before that moment and immediately after it.
Questions
What does FOB mean in apparel sourcing?
Free on board: the seller delivers the goods onto the vessel at the origin port, and freight, insurance and risk pass to the buyer from that point.
What does DDP mean?
Delivered duty paid: the seller bears all cost and risk, including import duties, to the named destination.
Which is better for a buyer?
FOB gives control and documentary visibility at the cost of complexity. DDP gives simplicity at the cost of information. Larger importers generally prefer FOB for exactly that reason.
Do incoterms decide whether goods conform?
No. They allocate cost and risk in transit. Whether the goods match what was ordered is governed by the purchase order and the description it was written from.
General guidance. Incoterms are defined by the International Chamber of Commerce and are revised periodically; confirm which version your contract incorporates.