Part of the Comprehensive Incoterms Guide
DDP In Plain English
For DDP (Delivered Duty Paid) shipping, the seller arranges the entire shipment, including import customs.
Where Is The Named Place For Handing Over Responsibility From The Seller To The Buyer?
The seller is liable and responsible for the entire shipment. The buyer is only responsible for unloading the goods, including import clearance/payments. The named place of delivery is usually the buyer’s choice of warehouse.
What Does The ICC Say?
Recommended for containerized freight.
Is This A Good Choice?
This is probably not a convenient arrangement, as the seller is usually in a much poorer position than the buyer for arranging tasks in the import country. This can lead to several problems (refer tips and tricks). Less experienced importers should probably avoid this incoterm, and consider DAP instead.
DDP Tips And Tricks
- Some countries, including the US, do not permit forwarders to complete customs clearance. Therefore, the supplier must be registered as an importer, or else they will not be able to complete import clearance.
- Suppliers should also be experienced acting as an importer. Import clearance is complicated, and if the process is not followed to the letter, the shipment is likely to be held up in Customs.
- Therefore, the seller should insist on a copy of the entry documentation from the clearance agent to be provided soon after submission, to check for errors. In some countries, Customs accepts timely corrections.
- Domestics sales tax can only be paid by locally-registered businesses. If the seller isn’t registered, the buyer will probably become liable for sales tax. There is a workaround by qualifying the rule, e.g. Delivered Duty Paid (Sales Tax unpaid).
- DDP does not specifically require the seller to undertake import clearance. The buyer and seller may agree that the buyer manages this task instead.
- If the buyer offers to clear the goods for the seller, they should insist on using their own clearance agent. Otherwise, they risk losing control of the shipment’s whereabouts. They could end up being responsible for unnecessary costs, especially demurrage and storage. This can be overcome by specifying elsewhere in the sales contract that the buyer is not liable for any additional costs caused by clearance agent error, and is not liable for any costs beyond a short period (2-3 days) after carrier release.
- A sales quotation from the supplier based on this incoterm is effectively the landed cost and can be used to decide whether to source domestically or import.