The DDP Incoterm, short for Delivered Duty Paid, is one of the ICC trade terms created to establish responsibilities in an international trade contract. Delivered Duty Paid is an Incoterm that can be used for all modes of transport. This Incoterm gives the most responsibility to the seller, who is responsible for all freight costs and import and export duties until the named destination. Learn more about the meaning of DPP in shipping and get ready to buy and sell cargo internationally effectively.
The DDP Incoterm 2020 can be used for all modes of transport, including multimodal deliveries when multiple modes of transport are used. The DDP Incoterm establishes the most duties for the seller, who is responsible for delivering the goods to a named destination, which is usually the buyer’s designated address. The risk of the goods transfers to the buyer once the goods are made available at the agreed destination.
The DDP is the only Incoterm where the seller is fully responsible for the import customs clearance procedures in the destination country. In this sense, the DDP shipping terms are the polar opposite of EXW, in which the buyer arranges everything from the export customs clearance to delivery.
When selling goods under DDP, the invoice issued by the seller already includes the transport costs, clearance fees and any potential charge that may come up. Since the buyer is paying for the invoice that includes everything, the seller has little incentive to negotiate the best transport prices, etc., so the costs of shipping with DDP are the highest in the industry.
Under the DDP Incoterm, the seller is responsible for all the steps until the cargo is made available at the agreed destination. This means they need to arrange loading, transport, export and import customs clearance, and any other expense incurred during the delivery.
See below the description of the responsibilities of the seller and buyer when shipping under DDP shipping terms.
For example, an Irish company sells 100,000 units of merchandise under DDP shipping terms to a US buyer. The US buyer names the point of delivery to be their depot in inland Virginia.
DDP CUSTOMS CLEARANCE
When using DDP terms for import and export, the seller or exporter covers all duties, taxes and clearance charges. The seller is responsible for providing all documentation necessary for the trade, as well as getting the goods ready for inspection at the port of origin and destination.
In practical terms, having the seller deal with the import clearance procedures is one of the reasons why using DDP for international trade may be tricky unless the seller has proven experience exporting on this specific route. Each country has specific rules, and it may be that the seller needs to be a registered business or a resident to be able to complete the import documentation.
Shipping under DDP is very advantageous for domestic transport or shipping within a trade area, such as the EU.
Under the Delivered Duty Paid Incoterm from 2020, neither the seller nor the buyer has an obligation to purchase shipping insurance. However, because the seller carries the risk of the goods until they are ready to be unloaded at the named destination, they often purchase insurance on their end.
Join the digital logistics world and access a vast network of vetted freight forwarders. At Eurosender, we collaborate with reliable cargo transport companies and international carriers and will connect you to the provider that best suits your needs. Our team of experts will act as an intermediary on your behalf to organise every detail of the shipping service.
Get in touch with an expert
NEED MORE INFORMATION?