CIF vs DDP – who pays for what?
CIF is Cost, Insurance and Freight and DDP is Delivered Duty Paid. We compare who pays for transport, customs clearance and duty, and where risk passes to the buyer.
Key differences
CIF and DDP allocate three costs differently. Under CIF, the seller covers insurance; under DDP, import clearance as well as import duty and VAT. The two rules also differ in the point at which risk passes to the buyer and in the mode of transport. CIF applies only to sea and inland waterway transport. Under CIF, the main freight ends at the port of destination; under DDP, it ends at the agreed place, e.g. your warehouse.
- Insurance
- CIFSellerDDPNo obligation
- Import clearance
- CIFBuyerDDPSeller
- Import duty and VAT
- CIFBuyerDDPSeller
- Risk passes
- CIFOn board the vessel at the port of loadingDDPAt the place of destination, before unloading
- Mode of transport
- CIFSea onlyDDPAny
Full cost breakdown
| Cost | CIF | DDP |
|---|---|---|
| Export clearance | Seller | Seller |
| Transport to the port or terminal | Seller | Seller |
| Loading for main carriage | Seller | Seller |
| Main carriage (freight) | Seller | Seller |
| Insurance | Seller | No obligation |
| Unloading at destination | Buyer | Buyer |
| Import clearance | Buyer | Seller |
| Import duty and VAT | Buyer | Seller |
| Risk passes | At the port of loading, when the goods are on board the vessel – even though the seller pays for freight and insurance. | At the place of destination, after import clearance, when the goods are ready for unloading. |
| Mode of transport | Sea and inland waterway transport only | Any mode of transport (sea, rail, air, road) |
Notes
- CFR and CIF – the main freight ends at the port of destination. Transport from the port to the warehouse is paid by the buyer, while under the D rules (DAP, DPU, DDP) this leg is the seller’s responsibility if the place of delivery is a warehouse.
- Unloading at destination: if unloading costs are included in the contract of carriage concluded by the seller, the seller pays them and cannot charge them to the buyer afterwards.
- Insurance: only the seller is obliged to insure, and only under CIF (at least Institute Cargo Clauses (C), 110% of the value) and CIP (Institute Cargo Clauses (A), 110% of the value). Under the other rules, nobody has to insure the goods – but once risk has passed, any loss is borne by the buyer.
What to watch for when importing from China
CIF Cost, Insurance and Freight
CIF works like CFR, but the supplier also insures the goods – though only with minimum cover (Institute Cargo Clauses (C), 110% of the value of the goods), unless you agree on broader cover. The policy is usually issued by a Chinese insurer, so you would have to pursue any claim abroad. Check the scope of the policy or insure the goods in Poland.
More about CIF →DDP Delivered Duty Paid
The supplier has to act as the importer in Poland: declare the goods for customs clearance and pay duty and VAT. A Chinese supplier is rarely able to do this on its own, so it uses intermediaries. Goods shipped under DDP sometimes do not go through proper import clearance – and it is then the consignee who has a problem with goods that were not legally released for free circulation. With a new supplier, DAP is the safer choice.
More about DDP →When to use CIF and when to use DDP?
- CIF – for sea freight, when the supplier arranges freight and insurance, and the policy’s minimum cover is enough for you – or you will arrange broader cover.
- DDP – when the supplier is reliable and can legally clear the goods in Poland as the importer, and you want the goods delivered with duty and VAT paid.
Has your supplier quoted a price including transport?
Compare it with our offer for transport from China – by rail, sea or air – with customs clearance in Poland and cargo insurance. Send us your cargo details and we will prepare a quote tailored to your shipment.
Request a quoteFAQ
What is the main difference between CIF and DDP?
CIF and DDP allocate three costs differently. Under CIF, the seller covers insurance; under DDP, import clearance as well as import duty and VAT. The two rules also differ in the point at which risk passes to the buyer and in the mode of transport. CIF applies only to sea and inland waterway transport. Under CIF, the main freight ends at the port of destination; under DDP, it ends at the agreed place, e.g. your warehouse.
Where does risk pass to the buyer under CIF?
At the port of loading, when the goods are on board the vessel – even though the seller pays for freight and insurance.
Where does risk pass to the buyer under DDP?
At the place of destination, after import clearance, when the goods are ready for unloading.
Can CIF and DDP be used for rail freight from China?
Only DDP. DDP works with any mode of transport, while CIF applies only to sea and inland waterway transport. That is why CIF is not used for rail freight from China.
Compare other pairs
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). This page is an independent, simplified summary of how costs and risks are divided – it is not affiliated with or approved by the ICC. When drafting contracts, use the official text of the Incoterms® 2020 rules published by the ICC.