“A Beginner’s Guide to Delivery Duty Paid (DDP)
Delivery Duty Paid (DDP) is a method of delivery where the seller assumes all shipping risks and costs until the goods reach their destination. Buyers can benefit from this system as they take on less risk, liability and costs. For sellers, DDP must be handled with care as it can quickly reduce profits. The only thing the seller does not do under the DDP arrangement is to unload the goods at the destination. Once the goods reach the buyer’s destination, they are responsible for the item. Delivery Duty Paid is a shipping system based on International Commercial Terms (Incoterms) for international shipping. This is an official method developed and endorsed by the International Chamber of Commerce, the body that regulates international shipping.
Seller’s Responsibilities
cargo handling
The DDP does include loading and unloading procedures, which are usually carried out by the seller – meaning the responsibility for the entire lawsuit rests with him.
Initial stage: load the cargo and deliver it to the port
Phase 2: Unload and prepare for shipment procedures
Stage 3: Shipping the Goods
Shipping and Delivery Conditions
According to Incoterm DDP, the seller is responsible for delivering the goods to the destination agreed upon by the contracting parties. Again, the seller pays shipping on DDP terms. Transportation-related activities involved in the process may include road transportation, ocean transportation, and transportation to designated locations.
cost
According to DDP incoterms, DDP fees are borne by the seller and include packaging and loading costs, shipping and delivery costs, freight forwarding fees, dock and loading fees to port, insurance and customs fees, and customs clearance fees (including import and export).
insurance
This is how DDP insurance works, the seller has no obligation to the buyer to insure the goods, but he/she must insure the goods as part of the customs clearance process.
Customs and customs clearance
In DDP export, the seller needs to pay customs duties and go through customs clearance procedures. He/she is not only responsible for the export customs formalities, but also has to be the import recorder, i.e. pay all duties and taxes of the destination country.
document
The seller provides the buyer with the following documents:
Bill of lading
commercial invoice
Certificate of Insurance
packing list
export permit
risk transfer
Passing of risk in DDP means that the seller assumes all risk and responsibility for the goods up to the point of delivery.
Notice
Seller must notify Buyer of any shipping and delivery terms during shipment.
Buyer’s responsibility
cargo handling
After the seller has delivered the goods, the buyer must unload the goods. If the agreed place of delivery is the buyer’s port, the responsibility for loading and unloading of the goods rests with the buyer.
Shipping and Delivery Conditions
Typically, in DDP incoterm – the buyer is not involved in shipping and delivery related activities. But if the named place is a port in the buyer’s country, then the buyer must load the goods and bear the cost of transportation from the port to the warehouse.
cost
Buyer is not required to pay DDP fees as all documentation is provided by seller. The only costs borne by the buyer are those after the seller has completed the delivery.
insurance
DDP does include insurance but as the goods are delivered at his/her place there is no risk to the buyer.
Customs and customs clearance
Buyer is not responsible for customs as import customs will also be enforced by seller. However, in some cases, the import clearance process is risky, so the process may be performed by a buyer who is more aware of local requirements and practices (such as GST and VAT).
document
The seller provides the buyer with the proof of documents, so there is basically no obligation to the buyer in terms of DDP documents. However, in critical situations, the seller may require the buyer to assist in the import procedures.
risk transfer
Once the goods are delivered by the seller, i.e. from port to door, the buyer must bear all risks and liabilities for the goods.
Notice
If the parties agree that the place of delivery is to be determined by the buyer, it is the buyer’s responsibility to notify the seller accordingly. In addition, the buyer must give the seller sufficient notice of time and delivery terms and destination. This procedure can be mentioned in the contract and can proceed accordingly.
Comparison of DDP and DAP
DAP (Delivered At Point) is different from DDP. Under DAP, the buyer is responsible for customs clearance, duties and taxes. Under the DPP, the seller is obliged to clear the goods and pay import duties and taxes. DAP is more suitable for cases where customs clearance at the border or customs is not required during the import process.
Notes for importers and exporters
DDP shipping agreements are more beneficial for buyers who know little about shipping and want a hassle-free experience. Experienced sellers can also benefit from this system because they have full control over costs, including factors that maximize profits.
Importers/buyers with more experience are more likely to avoid this type of shipping agreement as they are more likely to have a more cost-effective way to import their goods. These companies will have a network of responsible agents who can handle buyer needs.
In general, we do not recommend using DDP by the sea. However, DDP shipping from China is more common and meaningful for air express or package shipping. If you need DDP service shipped from China, please feel free to contact us.”
