Ensuring Smooth Deliveries with DDP Shipping: Tips for Sellers and Buyers

The seller has to pay the import duties, including inland transportation from import point to the premises of buyer to deliver the goods to the destination in the country of the buyer in a Delivered Duty Paid (DDP) arrangement. The  seller pays all costs including import duties, taxes, and any other charges related to delivery, cleared for import. The place of destination should be mentioned in DDP.

The maximum obligation for the seller is represented by DDP while the minimum obligation is represented by EXW (Ex Works). So, the responsibility, cost, and risk lies on the shoulders of the seller. The seller bears the entire risk of loss until goods are delivered to the premises of buyer as he literally provide door-to-door delivery, including customs clearance in the port of export and the port of destination under a DDP Incoterm.

It is also required to obtain import licenses, permits, or certain payment options with the Customs for the seller. DDU (Delivered Duty Unpaid) term should be used instead of DDP (Delivered Duty Paid) if the seller is unable to obtain an import license.

The buyer has minimal responsibilities in a Delivered Duty Paid shipping agreement. The responsibilities of buyers are to unload the goods at the prearranged point and to freight them to their final destination. The buyer does not accept any risk or advise the seller on import responsibilities or any other documentation during shipping under this arrangement.

The seller is allowed to control the logistical costs and adjust them accordingly in order to maximize profit like any shipping Incoterm system in which the seller controls the export of the goods. The seller is also allowed to choose the shipping service that is willing to offer the biggest commission for the contract. These benefits are not necessarily provided to the buyer.

There are numerous benefits of Delivered Duty Paid for an inexperienced or busy buyer as most of the responsibility for the freight and paperwork of the goods is of the seller which gives the buyer a chance to only arrange for the sale or use of the products he/she is going to receive. A hassle-free situation can be enjoyed by the buyer as he/she has no responsibility of the goods until they fully arrive.

Delivered At Point or DDP differs from DDP in the point of responsibility. The buyer is responsible for customs clearance, duties, and taxes in case of DDP whereas, it is the obligation of seller to clear the goods and pay for the import duties and taxes under DPP.

DAP is more useful for the transportation of goods when there is no necessity to clear the goods at borders or customs. All the documentation is taken care of for the buyers in DDP whereas there is more paperwork to deal with for buyers in DAP.

A Delivered Duty Paid shipping agreement is more useful for buyers who want a hassle-free experience and have very little shipping knowledge. However, an experienced seller also benefits from an DDP arrangement as they have total control over costs, including factors that could maximize their profit. 

This shipping agreement is generally avoided by buyers who have more experience, as they are more likely to have more cost-effective ways of importing their goods. These companies generally will have a network of responsible agents who can deal with the  demands of buyer easily. The DDP shipping agreement is more useful for buyers who does not form these relationships yet, or do not import very often. This can be the most trouble-free shipping system for them. DDP is generally not recommended for ocean shipping. This arrangement is more common and makes more sense for parcel shipping or air express.