Delivery duty paid in transit - What is DDP?
DDP is an acronym for "delivered duty paid" and is used for international shipments. The seller delivers the goods when the goods are available for pickup at the agreed destination. The goods must be cleared for import and ready for unloading.
The seller organizes the customs clearance of the import and export goods, performs all customs requirements, pays all costs and bears the risks involved in transporting the goods to the destination. DDP may refer to goods delivered by any mode of transport.
Advantages and disadvantages of DDP
DDP buyers have pros and cons. Buyers may prefer DDP because they know the total cost at the time of purchase, don't have to worry about the supply chain, and they are not responsible for insurance and fees until the goods are due to receive.
The buyer's disadvantages include not being able to control the movement of goods and not being able to contact the shipping company. If the manufacturer quotes a full price, shipping and import costs are opaque. Buyers may want to switch to another manufacturer that does not provide DDP but they do not know the cost of producing the current product.
DDP and Incoterms shipping
DDP is one of the 11 ICC Incoterms. Incoterms is a set of international trade terms designed to reduce possible confusion and conflict when importing and exporting goods. The language barrier is just one problem Incoterms has overcome by introducing three-letter acronyms and a standardised definition of each letter. Seven of these terms refer to all modes of transport, while the other four refer only to sea and inland waterways.
DDP and FOB
Free on board (FOB) is a common mode of transportation. FOB means the buyer bears all costs and responsibilities once the goods are loaded on board. The ship and port designated by the buyer for shipment and discharge.
The difference between DDP and FOB terms is that the seller uses DDP to manage delivery and associated costs, while the buyer is responsible for FOB.
DDU and DDP
DDU means that the seller pays all expenses except import duty or customs duty on goods. Therefore, the only difference between DDP and DDU is the party responsible for paying taxes and duties. DDU is an Incoterm that is being phased out. The 2010 version replaced four Incoterms (DAF, DES, DEQ, DDU) with two (DAT, DAP). The 2018 version of Incoterms doesn't include DDU, but some companies that have used it in the past may continue to use it.
DDP and landed cost
Landed cost is the cost of the goods plus all the costs involved in shipping, exporting and importing. DDP and landed cost are almost the same as they both cover all the costs from manufacturing to the buyer receiving the goods. The main benefit of DDP is that the buyer knows exactly how much the goods will cost. It's hard to calculate when the buyer pays everything separately. Landed cost may include the cost of goods plus the cost of transport to the dock, fumigation, export formalities, freight, security surcharges, documentation, port charges, customs charges, insurance, customs clearance, AQIS clearance and road transport.
DDP shipping remains one of the most popular modes of transportation for international businesses as it is popular with buyers. They take less risk until the product is delivered, so it's in their best interest. However, if there are too many problems, the costs associated with the seller's DDP can make it unprofitable.
DDP for World is a full-service and shipping forwarder dedicated to assisting our clients in focusing and growing their businesses. We do DDP shipping since 2015 by handling home décor, Pet products, battery, power banks, DG cargo, general cargo and Amazon FBA forwarding service. We make your shipping easier and faster by Sea, Air, Express, Truck or Railway. If you run an e-commerce business and want to find a trusted company to provide DDP services to work with, please contact us.
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