What is the DDP Incoterm (Delivery Duty Paid)?
The DDP Incoterm, or “Delivery Duty Paid” Incoterm, states that the seller must make the goods available to the buyer at a prearranged location (buyer’s factory, warehouse etc.) and cover all associated expenses including unloading the goods from the carrier and any customs procedure costs and tariffs that may apply. Under the DDP Incoterm, the seller bears full responsibility for all costs and risks until the goods have been unloaded at the agreed-upon location.
Since this means that the seller would essentially be taking charge of almost the entire transportation from start to end, he’s relieving the consignee of nearly all liabilities and responsibilities. That said, DDP and DAP are very popular Incoterms for sellers looking to provide high levels of customer service. The downside to this for the importer is the lack of control, given the few responsibilities he has, which could be an attractive option for first-time importers. The DDP Incoterm is versatile as it can be used irrespective of the mode of transport.
Seller’s obligations under the DDP Incoterm
- Delivery of goods and documents required
- Packaging and wrapping
- Inland transport in the country of origin
- Customs handling fees at origin
- Origin charges
- International freight
- Destination charges
- Customs handling fees at destination
- Payment of duties and taxes
- Inland transport at the destination country (depending on agreed location)
Buyer’s obligations under the DDP Incoterm
- Payment of goods
Even though cargo insurance is not obligatory under DDP, most sellers prefer to purchase insurance.
This is because sellers have significantly more responsibilities than buyers and their liabilities only end when the cargo is delivered. It is important to always list insurance terms and conditions in the sales contract.