What Is Delivered Duty Paid (DDP)?
Delivered duty paid (DDP) is a delivery term defined by the International Chamber of Commerce where the seller takes full responsibility, risk, and costs linked to shipping goods until they reach the buyer at the designated port.
Under this agreement, the seller covers all shipping expenses, export and import duties, insurance, and any other costs that arise during transportation to the agreed location in the buyer’s country.
Key Takeaways
Understanding Delivered Duty Paid (DDP)
DDP is a shipping agreement that places maximum liability on the seller. Aside from covering shipping expenses, the seller must organize import clearance, pay taxes, and fulfill any import duty owed. Liability shifts to the buyer only after the goods are available at the destination port, and payment terms must be established by both parties before completing the transaction.
Seller’s Responsibilities
The seller must coordinate transport through a shipping company and bear the associated expenses, ensuring customs clearance at the buyer’s location and possibly obtaining necessary licenses. However, unloading the goods is not required of the seller.
Special Considerations
DDP is most suitable when supply costs are stable and predictable. Since the seller bears most of the risk, typically more experienced suppliers utilize DDP agreements. However, U.S. exporters should exercise caution, as VAT and potential unexpected costs may arise. Furthermore, limited visibility into the supply chain for U.S. importers can lead to financial discrepancies.
The Bottom Line
Delivered duty paid (DDP) is an international commerce term specifying that the seller is liable for all shipping-related costs, including export and import duties, insurance, and other incurred expenses until the goods reach the buyer’s designated location. These agreements are primarily valued for their predictability in terms of supply costs, placing the bulk of the risk on the seller.
