DDP incoterms: Meaning, terms and conditions

What does DDP mean?

Incoterms are published by the International Chamber of Commerce (ICC), which revises and updates them every ten years.

DDP, which stands for Delivered Duty Paid, is an incoterm suitable for any mode of transportation and is known for being the easiest shipping process for the buyer.

Under DDP incoterm, the seller bears all costs and responsibilities, from managing the goods at the origin point to delivering them at the designated place in the destination country. He also pays for the fees related to importation. DDP is actually the only incoterm where the seller is required to pay for both export and import charges.

Not everyone should choose to work with DDP incoterms, as most of the shipping process is managed by the seller. Having some experience and already being familiar with shipping activities is essential for sellers who use DDP.

What are the buyers and the sellers responsibilities with DAP?

As we said, under DDP Agreement, the seller has far more responsibilities than the buyer. Let’s take a closer look at both parties’ obligations.

Seller’s obligations under DDP:

• Manage the packaging and labeling of items;
• Load goods onto a local carrier (truck, van, etc.) and pay for the charges related to this operation;
• Transport and deliver goods to the shipping terminal;
• Remove goods from the local carrier and load them onto the main carrier, then pay the Origin Terminal Handling Charges (OTHC);
• Handle the export clearance, which includes export duties, taxes, and customs clearance;
• Pay freight charges for the transportation;
• Transfer items to local transportation upon arrival at the terminal (port, airport, etc.) and pay the Destination Terminal Handling charges (DTHC);
• Deliver the goods to the final destination;
• Handle the import clearance, which includes import duties, taxes, and customs clearance.

Buyer’s obligations under DDP:

• Unload the goods at their final destination.

With DDP Agreement, the seller is responsible for the entire shipping process, and he is responsible for any risk of loss and damages to goods. Note that with DDP incoterm, the seller is not required to pay for insurance coverage, but it is highly recommended.

When to use DDP Agreement?

As a buyer, it is interesting to use DDP Agreement when you want to simplify your shipping process. The seller, on the other hand, needs to be experienced. He also needs to make sure that he has enough knowledge in the customs regulations of the destination country.

DDP Agreement should be used:

• When the exporter is experienced and familiar with the bureaucratic procedures in the destination country;
• As an added value for the customer, which makes the seller more competitive;
• When the exporter has a significant network and has access to competitive freight rates;
• When the trade-relationship is a long-term one, and can be trusted;
• For high-value items;
• For new importers who want to minimize risks and focus on their core business.