DDP (Delivered Duty Paid): Incoterm Meaning & Shipping Pricing

What is DDP (Delivered Duty Paid)?

DDP, or Delivered Duty Paid, is an Incoterm defined by the International Chamber of Commerce (ICC). It represents the maximum obligation for the seller, who is responsible for delivering goods to a specified destination and covering all costs, including duties and taxes. Under DDP, the seller assumes all risks and responsibilities until the goods are delivered to the buyer's premises or another agreed-upon location.

Key Features of DDP

1. Seller's Responsibilities: The seller takes on all obligations, including transport costs, insurance, export and import customs duties, and taxes.
2. Delivery Point: The seller delivers the goods at the agreed destination, fully cleared for import.
3. Risk Transfer: Risk transfers to the buyer only when the goods have been delivered to the specified location.

Seller’s Responsibilities

• Transport Costs: The seller is responsible for all transportation expenses from the point of origin to the final destination.
• Insurance: While not mandatory, the seller is encouraged to insure the goods during transit.
• Customs Clearance: The seller must handle export customs clearance in the country of origin and import clearance in the destination country, paying all associated duties and taxes.
• Delivery to Buyer: The seller delivers the goods to the buyer’s premises or a specified location, fully cleared for import.

Buyer’s Responsibilities

• Acceptance of Goods: The buyer's primary responsibility is to receive the goods at the specified location.
• Further Transportation: If necessary, the buyer may need to arrange transportation from the delivery point to their final destination, although this is typically included under DDP.

Shipping Pricing Under DDP

When calculating shipping prices under DDP, several cost components should be considered:

1. Freight Charges: The cost of transporting the goods from the seller’s location to the buyer's designated location.
2. Insurance: Optional but advisable; the seller may choose to add insurance costs.
3. Customs Duties and Taxes: All import duties, taxes, and fees must be calculated and included in the total price.
4. Terminal Handling Charges: Fees related to unloading and handling at the destination port or terminal.
5. Export Customs Fees: Any costs associated with export customs clearance in the seller's country.

Example Scenario

Scenario: A company in France sells electronics to a buyer in Brazil using DDP.

• Seller’s Responsibilities:
  • Arrange and pay for shipping the electronics from France to Brazil.
  • Handle all export and import customs formalities, including paying duties and taxes.
  • Deliver the goods to the buyer’s address in Brazil.
• Buyer’s Responsibilities:
  • Receive the electronics once they arrive at their specified location in Brazil.

Conclusion

DDP is one of the most favorable Incoterms for buyers, as it places the responsibility for logistics and customs clearance entirely on the seller. Understanding DDP helps businesses navigate international shipping more effectively. At HUAQI International Logistics, we offer expert guidance and comprehensive logistics solutions to ensure your shipments are handled efficiently and cost-effectively.