DDP [Delivery Duty Paid] Incoterms (2024)

DDP Incoterm is one of the 11 trade terms in the incoterms series, published by the International Chamber of Commerce (ICC). It stands for Delivery Duty Paid, a terminology which can be used for any mode of transportation. Also, it lays maximum risk and responsibilities on the seller.

Shipping TermsAs per DDP, all legal formalities need to be carried out by the seller. As implied earlier, the destination port will be in the importer's country, with the importer's house/warehouse/any other place of their choice also being possible options for the destination port. The cost, risk, and responsibility of goods fall on the seller's plate too, until the goods are transported from the place of origin to the destination.

Seller’s Responsibilities

DDP places all the costs, risks, and responsibilities of a shipment on the seller. Some of the details of the exporter’s responsibilities are:

For loading and unloading goodsDDP does include the loading and unloading procedure, which the seller commonly carries out. This means that the responsibility for the entire course of action rests with them.

Initial stage: Loading of goods and transporting them to the port of destination.
Second stage: Unloading goods and preparing them for shipping.
Third stage: Loading of goods before shipping.

For transportation and delivery termsThe transportation-related activities involved in the process could include road transport, shipping transport, and nominated place transport.

Delivery terms

Under DDP, the seller is responsible for the delivery of goods up to the place of destination agreed by the parties to the contract.

Costs

Under DDP terms, the DDP charges are borne by the seller, including packing and loading cost, transportation & delivery cost, freight charges for freight forwarding fees, terminal and loading charges till port, insurance, and duty charges, and custom clearance charges (both for export & import).

Insurance

The seller has no obligation to the buyer to insure the goods, but as a part of the customs clearance process, they have to get the insurance of goods.

Duty and customs clearances

In DDP export, the seller has to pay customs duties and deal with customs clearance procedures. They not only have to look after the export customs proceedings but also has to be the import recorder, i.e., payments of all duties and taxes on the destination country.

Documents

The seller provides the following documents to the buyer:

Bill of Lading
Commercial Invoice
Insurance Certificate
Packing List
Export License
A acknowledgement of transfer of risk

Transfer of risk

The risks and responsibilities of the goods being transported are transferred from the seller to the buyer at the final destination wherein they are delivered.

Buyer’s responsibilities

As implied earlier, DDP are an incredibly buyer-friendly set of incoterms. As a result, the buyer’s role and responsibilities are fairly minimal.Loading and unloading of goodsThe buyer has to unload the goods once they are delivered by the seller. In case the agreed-upon place of delivery is the buyer's port, the responsibility of unloading and loading goods rests with the buyer.

Transportation

As per DDP, the buyer has no part to play in the transport activities. But if the nominated place is a port in the buyer's country, then the buyer has to load the goods and bear the transportation cost from the port to the warehouse.

Delivery terms

The seller is responsible for the delivery of goods to the buyer until the destination point. The costs of delivery will also be borne by the seller.

Costs

There is no cost in DDP for the buyer, as all the proof of documents is provided by the seller. The only expenses incurred by the buyer are those that are after the delivery is done by the seller.InsuranceDDP does include insurance, but there is no risk for the buyer as the goods are delivered at their place.

Duty and custom clearances

The buyer has no responsibility for customs as the import customs will also be carried out by the seller. But in some cases, the import clearance procedures are risky, so the process may be carried out by the buyer, who has better knowledge of local requirements and practices, such as GST and VAT taxes.

Documents

The seller provides the proof of documents to the buyer, so there is no obligation to the buyer in terms of DDP documents. But in critical conditions, the seller may require the buyer’s assistance for documents for clearing import procedures.

Transfer of risk

The buyer has to bear all risk and responsibility of goods after they have been delivered by the seller, that is from the port to the door of the buyer’s warehouse.

Notices

If both parties agree that the buyer will determine the place of delivery, it is the buyer’s responsibility to notify the seller accordingly. Also, the buyer has to give sufficient notice to the seller regarding the timing and delivery terms, and place of destination. This procedure can be mentioned in the contract and carried out accordingly.

When should exporters/importers include DDP in their booking?

DDP maximizes the seller's risks and obligations. Additionally, it can be used for any mode of transportation: air, sea freight, or road-based travel.

Sellers can agree to incorporate these incoterms in their trade contracts as it allows them to have a high level of control over proceedings, even if they have to bear the majority of the costs for a given shipment.

Buyers abdicate a high degree of control over proceedings in a shipment when they include these incoterms in their shipping agreement with their sellers. At the same time, they are spending a minimal amount of money, bearing minimal risks, and responsibility in any given shipment.

So, essentially this incoterm could be selected if sellers want greater control and stakes in a shipment, while the buyer wishes to bear minimal to non-existent costs and responsibilities in the same shipment.

An Example of DDP Incoterms in a Shipment?

Bloom Corp is an automobile parts exporter based in Detroit, Michigan. They are exporting a consignment of spare alloy wheels to an importer named Dale Ltd in Kingston, Jamaica. Bloom Ltd starts with executing the inland transit procedure, then clearing the freight and customs, and then shipping the wheels to the destination port in Kingston. Once the goods reach this destination port, Bloom Ltd handles import customs duty and expenses. After this point, the risk and costs are transferred to Dale Ltd.

Difference between DDP, DAP, and DPU

DDP, DAP, and DPU are all extremely buyer-centric incoterms with a varying degree of responsibility on the seller. Here are the differences:

Also read:

FAQs on DDP Incoterms

When should one use DDP delivery duty paid freight terms?

The DDP incoterm can be used in conditions where the seller wishes to seize complete charge over trade arrangements & the buyer prefers less engagement in carriage proceedings.

Who pays freight on DDP?

The seller pays freight on DDP. They are responsible for all the charges till the nominated place or port.

Does DDP include unloading?

Loading and unloading of goods are to be carried out by the seller till the goods leave the exporter country's port, but the unloading of goods, once they reach the importer country's port, is to be carried out by the buyer.

How does DDP work?

The trade process under DDP starts when the seller starts to execute the inland transit procedure, and clears the customs & freight proceedings, so that they can finally ship the goods to the importer's country. Once goods reach the destination port, they also take care of import customs duty and procedure, after which the risk and cost responsibilities are transferred to the buyer.

Who is the importer of record under DDP?

The seller is the importer of record under DDP, as they not only looked after export customs but also imports customs proceedings.Does DDP include insurance?The insurance responsibility rests with the seller, and the buyer has no obligation in coverage and security measures.

What is the DDP price?

DDP price is a cost-bearing arrangement wherein the seller assumes all the expenses till the nominated place of a port.

Is DDP door to door?

DDP is a door-to-door transaction. The responsibility of delivering the goods from the point of origin in the exporter's country to the destination port in the importer's country or buyer's place rests with the seller, and here the buyer is entirely dependent on the seller for shipping and delivery of goods.

Also Read

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CIF Incoterms 2020 | Cost, Insurance and Freight
FOB Incoterms | Meaning and Shipping terms
FAS Incoterms 2020 | Free Alongside Ship | Meaning and Shipping term

DDP [Delivery Duty Paid] Incoterms (2024)

FAQs

What is an example of Delivered Duty Paid DDP? ›

Understanding Delivered Duty Paid

For example, a buyer in New York enters into a DDP deal with a seller from London to purchase a consignment of goods. It means that the seller from London has to pay for the transportation of the goods from their storage to the London port and to the port in New York.

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When should one use DDP delivery duty paid freight terms? ›

Many companies will only use DDP when shipping goods by air or sea freight. Buyers benefit heavily from DDP because they assume less risk, liability, and costs. Although DDP is a good deal for the buyer, it may be a big burden for the seller because it can quickly reduce profits if handled incorrectly.

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Why would a buyer accept delivery duty paid DDP freight terms when it may be the most expensive Incoterm option for the buyer? ›

Benefits of DDP Shipping

Since the seller is completely responsible for the entire shipment, this creates security for the buyer. This means that the buyer does not take on any of the risks or costs associated with shipping and customs clearance.

Who pays duty in DDP incoterms? ›

DDP indicates that the seller (exporter) assumes all the risk and transportation costs. The seller must also clear the goods for export at the shipping port and import at the destination. Moreover, the seller must pay export and import duties for goods shipped under DDP.

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Is DDP a good Incoterm? ›

Many companies will only use DDP when shipping goods by air or sea freight. Buyers benefit heavily from DDP because they assume less risk, liability, and costs. Although DDP is a good deal for the buyer, it may be a big burden for the seller because it can quickly reduce profits if handled incorrectly.

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What are the responsibilities of incoterm DDP? ›

Delivered Duty Paid (DDP) is an Incoterms Rule where the seller is responsible for all costs associated with the delivery of goods to the named destination. Under DDP, it is also the seller's responsibility to pay both export and import duties, taxes, and fees.

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What is the disadvantage of DDP? ›

DDP Incoterms removes the opportunity for the buyer to control to delivery time, or identify opportunities to speed the delivery process up should they need to. Because of this, delays are inevitable. Experienced buyers know that they can usually reduce delays by opting for faster shipping times.

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What are the risks of DDP Incoterm? ›

The point of risk transfer for the DDP Incoterm is at the named place of destination. This means that once the seller has delivered the goods to their destination per the specified terms, any risks associated with further delivery are transferred to the buyer.

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What is the difference between delivery duty paid and delivery at place? ›

The main difference between DDP and DAP is delivery to destination and who is responsible for import duty, taxes and security clearance. Under DDP, the seller assumes the maximum responsibility in costs and risk from the beginning to the end. Under DAP, the buyer bears the costs and taxes of import clearance.

Does DDP include duties and taxes? ›

When shipping DDP, the shipper is responsible for paying the duties, taxes, and fees, but that doesn't mean they have to absorb those costs. In an ecommerce scenario, all the necessary fees can be collected from the customer at the time of checkout.

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Can you use DDP for domestic shipments? ›

Fortunately, by utilizing Incoterms, you can make this as simple as changing EXW to DDP [name your delivery point] destination. Domestic and international use.

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Should I take FOB price or DDP? ›

By known FOB price, buyer should choose the term DDP if the distributor gave DDP price only 10% above its FOB price. However, if the distributor gives significant price difference with DDP price 40% higher than the FOB price, it is better for buyers to direct their own forwarder services by choosing FOB term.

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What is the difference between DAP and DDP Incoterm? ›

Under DDP, the Buyer is only responsible for unloading. The Seller is responsible for everything else including packing, labeling, freight, Customs clearance, duties, and taxes. Conversely, under DAP, the buyer is responsible for not only the unloading, but the Customs clearance, duties, and taxes as well.

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What is under the Delivered Duty Paid? ›

Under the Delivered Duty Paid (DDP) Incoterm rules, the seller assumes all responsibilities and costs for delivering the goods to the named place of destination. The seller must pay both export and import formalities, fees, duties and taxes.

What is an example of a DAP Incoterm? ›

Understanding Delivered-at-Place

For example, a buyer in London enters into a DAP deal with a seller from New York to purchase a consignment of goods. It means that the seller from New York has to pay to transport the goods from their storage to the port and from the port to London.

What is Delivered Duty Paid and delivered at place? ›

In a DAP shipment, the seller is only responsible for the delivery of the goods to an agreed-upon location. With DDP shipments, the seller is responsible for delivering the goods to the buyer's final destination, which is typically their warehouse or store.

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What does DAP include? ›

DAP is a Shipping Incoterm that means “Delivered at Place,” where the seller is responsible for all costs and risks associated with the delivery of the goods to the final agreed-upon place, usually the buyer's premises.