What is Delivered Duty Paid ?
297 reads · Last updated: December 5, 2024
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.
