What is delivery duty paid: Simplified Definition

Delivered duty paid or DDP is an agreement that holds the seller responsible for shipping the goods from the origin to the final destination, including packaging, labeling, warehousing, export and import duties, customs clearance, and final delivery.

 

DDP: Technical Definition

ClickPost defines DDP or Delivery duty paid as the delivery agreement, through which the seller takes on all the responsibilities, risks, and costs involved in shipping the product from its origin to the agreed-upon final destination of the buyer.

 

Who pays for delivery duty shipments

 

The seller pays the delivery duty. The seller is required to execute all transportation processes and bear other costs, including export clearance and customs documentation that the products need to reach the destination point.

 

What are the standard obligations of buyer and seller under DDP

 

Under DDP, the buyer is solely responsible for the 

  • Purchase of the product 

  • Providing necessary paperwork for shipping and customs clearance

  • Unloading of the cargo

A DDP is beneficial for the buyer because most of the liability and costs for shipping fall on the seller. The obligations of the seller are

  • Product invoice and documentation

  • Packaging and labeling

  • Warehousing

  • Export formalities and paperwork

  • Loading costs

  • Transit costs

  • Import clearance and taxes

  • Quality and security inspections

  • Final delivery to the agreed destination

  • Proof of delivery

What are the risks involved in DDP for the seller and buyer

The risks involved for the seller are

  • VAT charges

  • Storage costs due to delays

  • Damage costs

  • The cost incurred due to lost products

  • Bribery charges

The risks involved for the buyer are

  • No control over freight

  • Higher freight charges

  • Restricted supply chain information

  • Hidden shipment and import costs

What is the purpose of DDP

DDP or Delivery duty paid is a part of  twelve sets of internationally recognized rules commonly referred to as incoterms. DDP is a shipping agreement and method developed by the International Chamber of Commerce to standardize shipping operations across the globe. And it is also a regular practice in international shipments to manage complex norms of cross-border transportations. Each country frames its own set of rules and laws for custom clearance and duties. Moreover, DDP is more suitable for high-value shipments for ensuring safety and holding sellers responsible for international transportation fees.

 

What are the advantages of DDP

The buyer is at a more advantageous position considering the fact that the seller takes all the responsibilities till the unloading of the cargo which is under the liability of the buyer. The company selling the product takes care of everything from picking to final delivery making it hassle-free for the buyer.

 

Which is better CIF or DDP

CIF (Cost, insurance and freight value) holds the seller liable for transportation charges, insurance coverage and cost of the cargo till the shipment reaches the port. And CIF is used specifically for transportation via waterways, whereas DDP can be used for any mode of transport.

What is the difference between DDP and DAP?

While DDP is delivery duty paid, DAP is delivered at place, which means the buyer is responsible for customs clearance, import duties, local taxes, and unloading of the cargo. 

DDP is buyer-friendly and hence a favorable option in terms of simplifying customer involvement in shipments. Because the seller takes care of all the responsibilities leaving just unloading of cargo, the buyer can avoid a lot of hassle. Moreover, DDP has all the costs considered upfront, making it easier for sellers to devise prices accordingly. And DDP has more advantages, especially with cross-border transportation where the seller bears all shipping costs and executes complex procedures involved in customs clearance. Moreover, if the buyer needs more control over freight with less involvement in paying local taxes, DAP is a safe bet.