GLOSSARY
DDP: Delivery Duty Paid
What is delivery duty paid? Frequently abbreviated as DDP, delivery (or delivered) duty paid is a delivery agreement in which the seller bears all responsibility, risk, and costs for conveying goods until the buyer receives or transfers them at the destination port. Shipping charges, export and import duties, insurance, and any other expenses incurred during shipping to an agreed-upon location in the buyer’s nation are all covered under this agreement.
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How does (DDP) work?
DDP is a shipping agreement that places the greatest amount of obligation on the seller. Aside from shipping fees, the seller must arrange for import clearance, tax payment, and import duty. Once the products are made available to the buyer at the port of destination, the risk passes to the buyer.
The International Chamber of Commerce (ICC) developed DDP to standardize shipping globally; thus, DDP is most typically utilized in international shipping transactions. The benefits of DDP favor the buyer because they take less obligation and fewer costs in the shipping procedure, which places a significant load on the seller.
Key Takeaways
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- What does DDP stand for in logistics? Delivered duty paid (DDP) is a delivery agreement whereby the seller assumes all responsibility for transporting the goods until they reach an agreed-upon destination.
- DDP is an incoterm, or a standardized contract for international shipments.
- Under DDP, the seller must arrange for all transportation and associated costs including export clearance and customs documentation required to reach the destination port.
- The risks to the seller are broad and include VAT charges and storage costs if unexpected delays occur.
- A DDP benefits a buyer as the seller assumes most of the liability and costs for shipping.
What are the responsibilities of the seller with DDP?
With DDP agreements, the seller organizes transportation via any carrier and is responsible for the expense of that carrier as well as securing customs clearance in the buyer’s country, including obtaining the necessary approvals from the authorities in that nation. In addition, the vendor may be required to get an importation license. The vendor, however, is not liable for offloading the products.
The seller is responsible for providing the items, drafting a sales contract, and accompanying documentation, export packaging, arranging for export clearance, meeting all import, export, and customs procedures, and paying for all transportation costs, including ultimate delivery to an agreed-upon location.
The vendor must arrange for evidence of delivery, pay for all inspections, and notify the buyer once the inspection is completed. Deliveries are made to the agreed-upon location. If items are damaged or lost in transportation during a DDP transaction, the seller is accountable for the costs.
What is the difference between a DDP & DDU
In the world of shipping, delivered duty unpaid (DDU) means that it is the customer’s responsibility to pay for any of the destination country’s customs charges, duties, or taxes. These must all be paid for customs to release the shipment after it arrives.
On the other hand, delivered duty paid (DDP) means it is the shipper’s responsibility to pay any of the customs charges, duties, and/or taxes required to send the product to the destination country
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