Delivered Duty Paid (DDP) is an international trade term, also known as an Incoterm, that outlines the seller’s responsibilities for delivering goods to the buyer at a specified destination, including bearing all costs and risks associated with transportation, import duties, taxes, and other charges up to the point of delivery. DDP indicates that the seller fulfills their obligation when the goods are delivered to the buyer and are ready for unloading at the agreed-upon destination.
Key points related to Delivered Duty Paid (DDP) in supply chain and international trade:
- Delivery Point: Under DDP terms, the seller’s responsibility is fulfilled when the goods are delivered to the buyer at the agreed-upon destination. This could be the buyer’s premises, a warehouse, or another designated location.
- Transportation Responsibility: The seller is responsible for arranging and paying for the main carriage (transportation) of the goods to the agreed-upon destination. This could involve multiple modes of transport, such as land, sea, air, or a combination.
- Import Duties and Taxes: The seller is also responsible for covering all import duties, taxes, and charges associated with bringing the goods into the buyer’s country.
- Risk Transfer: The risk of loss or damage to the goods shifts from the seller to the buyer upon delivery of the goods at the agreed-upon destination.
- Cost Allocation: The seller covers all costs associated with transporting the goods to the agreed-upon destination, as well as import duties, taxes, and charges. The buyer is responsible for any costs and risks after delivery.
- Applicability: DDP terms are suitable when the seller wants to take on the full responsibility of transportation, including import duties and taxes, up to the buyer’s location.
- Documentation: The seller is responsible for providing the necessary export documentation, import documentation, and other documents required for transportation, customs clearance, unloading, and delivery.
- Risk and Control: The buyer assumes the risk once the goods are delivered and ready for unloading at the agreed-upon destination. The buyer also has control over the unloading process and subsequent distribution.
- Clear Communication: Precise communication between the parties is crucial when using DDP terms to ensure a shared understanding of the delivery point, responsibilities, and the comprehensive coverage provided by the seller.
DDP is one of the Incoterms that help define the terms of delivery, risk, responsibility, customs clearance, and associated costs between buyers and sellers in international trade. Careful consideration of the chosen Incoterm, such as DDP, is vital to ensure that both parties understand their obligations and that costs and risks are allocated appropriately.
Seller’s Responsibility Under DDP
- Goods delivery
- Packaging and marking
- Transportation of goods in the country of origin
- Transportation of goods to the agreed delivery point in the destination country
- Customs charges and handling fees in the origin and destination countries
- Additional charges and fees in the origin and destination countries
- Duties and taxes payment
- International freight
Buyer’s Responsibility Under DDP
- Goods payment
- Helping the seller in preparing any needed documents for export and import formalities
Cargo Insurance in DDP
Despite the fact that DDP does not need shipping insurance, most sellers prefer to provide insurance for the cargo. This is due to the fact that sellers have far more responsibilities than buyers, and their responsibilities just end when the cargo is delivered to the buyer.
Insurance terms and conditions should always be included in the sales contract.
