A seller sending a 40HQ from Shenzhen to Los Angeles gets two numbers for the same container: a DDP quote of USD 9,400, and FOB with his own broker, truck and duty at USD 7,520. Same cargo, same vessel. The gap is about 20%, and it is not hidden in one place — it sits across four lines inside the package price.
Two earlier notes on this site cover the three situations where FOB wins and the break-even arithmetic. This one is the invoice behind both: the four lines that make up the 20%, and the question that turns each line into a number you can check.
Line one: the duty reserve
DDP is priced per CBM or per kilo, and the price carries an assumed duty rate that has to survive a mixed book of cargo. Your goods pay their own rate. Ask for three things in writing — HS code, assumed rate, declared value. When the assumed rate is 5.5% and yours is 4%, the difference is not a rounding error: on USD 60,000 of goods it is USD 900 per container, paid by you and kept by nobody.
Line two: duty paid on your behalf, collected later
Under DDP the provider pays duty and import VAT at entry and invoices you 30 to 60 days later. That is a loan with a price, charged as a percentage of the tax — so it rises with the duty rate, not with the freight. Under FOB you pay at entry, but if you hold an importer number you also reclaim the VAT earlier and keep the float.
Line three: minimum charges spread over the wrong volume
Every shipment carries fixed costs: customs entry minimum, delivery minimum, dock appointment, a minimum for the file. Sixteen containers a year divide those by sixteen; two do not. Inside a package price they are invisible — you pay a share of the average, which is generous when your volume is small and expensive when it is not.
Line four: the service fee and the bundled extras
The last line is the simplest and the least discussed: coordination. That is real work and it should carry a number. What it should not carry is cost that belongs to other cargo — inspection reserves, remote-area delivery, a second delivery attempt. Ask which of these are included and which are charged on top; a package price that cannot answer is an estimate.
The four lines, one container
| Per 40HQ, goods USD 60,000 | DDP package | FOB, own clearance |
|---|---|---|
| Ocean freight and destination charges | included | USD 4,200 |
| Duty at the real 4% | included, reserved at 5.5% | USD 2,400 |
| Customs entry and delivery | included | USD 920 |
| Service fee and financing | USD 980 | — |
| Cash out | USD 9,400 | USD 7,520 |
The difference is USD 1,880 on the container — about 20% of what the FOB route costs, and about 3% of the goods value. Whether that is worth paying depends on one thing: can you clear and deliver this container yourself at a lower fixed cost than the premium?
When the package is the better buy
- No importer number, or the VAT is not recoverable: the reserve and the financing are not money you would have kept.
- Two or three small shipments a year at low value per CBM: your fixed clearance cost per shipment is high, and the package absorbs it.
- New destination without a broker or a delivery contact: paying for coordination is cheaper than learning by demurrage.
Five questions before the next booking
- Which HS code, which duty rate and what declared value sit behind this price?
- What are your per-entry minimum and your delivery minimum with appointment?
- How many days do you finance the duty, and at what cost of money?
- What is included — inspection reserve, remote delivery, second attempt — and what is charged on top?
- If I supply my own importer number, how much does the quote change?
The short version
DDP is a service, not a discount. It earns its premium when you cannot clear, deliver or reclaim tax yourself; it is expensive when you can. The 20% is not a hidden fee — it is four lines nobody showed you. Ask for them in writing once, and the next quote takes five minutes to compare.