What is Delivered Duty Paid ?

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Delivered duty paid (DDP) is a delivery agreement whereby the seller assumes all of the responsibility, risk, and costs associated with transporting goods until the buyer receives or transfers them at the destination port.This agreement includes paying for shipping costs, export and import duties, insurance, and any other expenses incurred during shipping to an agreed-upon location in the buyer's country.DDP can be contrasted with DDU (deliver duty unpaid).

Definition

Delivered Duty Paid (DDP) is a shipping agreement where the seller assumes all responsibilities, risks, and costs associated with delivering goods to the buyer's designated location at the destination port. This includes paying for shipping, export and import duties, insurance, and any other costs incurred during transportation to the agreed location in the buyer's country.

Origin

The concept of Delivered Duty Paid originated from the International Commercial Terms (Incoterms), first published by the International Chamber of Commerce (ICC) in 1936. DDP was established to simplify the division of responsibilities in international trade, helping buyers and sellers clearly understand their respective responsibilities and cost obligations.

Categories and Features

DDP is one of the terms in international trade, characterized by the seller bearing all costs and risks from shipment to the buyer's specified location. Its advantage is minimizing the buyer's responsibilities and risks, but the seller must handle complex import procedures and taxes. The opposite term is DDU (Delivered Duty Unpaid), where the buyer is responsible for paying import duties and taxes.

Case Studies

Case 1: A German company sells machinery to a US customer under DDP terms. The German company is responsible for all transportation, insurance, export, and import duties, ensuring the equipment is safely delivered to the US customer's designated warehouse. Case 2: A Chinese electronics manufacturer exports products to a French retailer using DDP terms. The Chinese company covers all costs from the factory to the French retailer's warehouse, including transportation and import taxes.

Common Issues

Common issues include the seller potentially underestimating import duties, leading to reduced profits. Additionally, the seller needs to be familiar with the import regulations of the buyer's country, or they may face delays or additional costs.

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Lisbon Treaty

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Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

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Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.

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Negotiable Instruments

A negotiable instrument is a signed document that promises a payment to a specified person or assignee. In other words, it is a formalized type of IOU: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on-demand.Common examples of negotiable instruments include personal checks, cashier's checks, money orders, certificates of deposit (CDs), promissory notes, and traveler's checks. The person receiving the payment, known as the payee, must be named or otherwise indicated on the instrument. Because they are transferable and assignable, some negotiable instruments may trade on a secondary market.

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A renewable resource is a resource that can be replenished naturally over time. As a result, it is sustainable despite its consumption by humankind.Renewable resources for the production of energy are considered especially important for their potential to replace non-renewable, or finite, resources. Additionally, renewable resources can offer cleaner energy solutions than those provided by non-renewable resources such as coal and fossil fuels.Examples of renewable resources include the sun, wind, water, the earth's heat (geothermal), and biomass.

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