What Is DDP shipping terms ?
DDP (Delivered duty paid ) 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 by sea or air to an agreed-upon location in the buyer’s country.
DDP shipping terms can be contrasted with DDU (deliver duty unpaid).
The scope of application of DDP shipping terms
The term applies to various modes of transport, but the DAP term should be used when the goods are delivered on board a ship or terminal at the port of destination.
Payment method of DDP shipping terms
The seller must bear all risks and costs of transporting the goods to the designated destination, including any “taxes” payable at the destination when customs formalities are required (including the responsibility and risk of customs formalities, and payment of handling charges, duties, taxes and other charges).
DDP transportation adjustment, delivery after tax, that is, the seller needs to deliver the goods to the domestic destination agreed by both parties, and complete the import customs clearance procedures, including customs procedures, payment of handling fees, customs duties and other taxes.
Generally, the delivery location refers to the buyer’s warehouse. The seller’s friend needs to bear a large part of the risk responsibility under this trade term, so it is not recommended that the seller’s friend sign this trade term if the buyer is cooperating for the first time or is not very familiar with it.
Under the trade DDP shipping terms , the seller is solely responsible for transportation and customs clearance. Generally, it takes more than a month for the goods to be shipped by sea. With such a long waiting time for receiving the goods, the buyer is likely to be unwilling in the end for other reasons.
Receipt. Therefore, the seller’s friend can use 100% of the former T/T as the payment method, and the buyer pays the full amount in advance, which can reduce the seller’s risk to the greatest extent.
There is also a common way of trade, that is DDU.
The full name of DDU is Delivered Duty Unpaid, which refers to unpaid delivery, that is, the seller delivers the goods to the domestic location specified in the contract between the two parties, but the buyer is responsible for the customs clearance of the imported goods, including paying customs duties, handling fees and other taxes.
Under the trade term of DDU, the risk responsibility is always on the seller before the buyer receives the goods, so the seller is generally responsible for purchasing the insurance of the goods for safety.
The terms under this trade term also involve a lot of complicated content, so when the seller communicates with the freight forwarder, he should clearly calculate some costs and turn the corresponding terms into a legally binding contract.
What is the difference between DDP shipping terms and DDU?
The biggest difference between DDP and DDU is that the importing country is responsible for customs clearance.
If the seller can clear the customs in the importing country, then the DDP trade term can be used; if the buyer is required to complete the customs clearance because of the customs clearance in the destination country, then the DDU trade term can be used.
Because the import customs clearance policies of different countries and regions are different, the buyer generally does not easily ask the seller to sign the terms of DDP or DDU, but more often to sign the terms of CIF. CIF is the term for delivery by shipment, that is, the seller arranges the shipment and purchases the corresponding insurance.
But does not bear the risk and responsibility of delivering the goods to the port of destination.
TIPS:
DDP shipping terms is a delivery agreement under which the seller assumes all responsibility for transporting the goods until the goods reach the agreed destination.
It is Incoterm, or a standardized contract for international shipping.
Under the DDP shipping terms , sellers must arrange for all shipping and related costs, including export clearance and customs documentation required to arrive at the port of destination.
The risks to sellers in the event of unexpected delays are extensive, including VAT, bribes and storage costs.
DDP shipping terms benefits the buyer because the seller bears most of the shipping responsibility and costs.
Notes for DDP shipping terms
In the overall operation process of the necessary conditions for DDP shipping terms , although the export company has no legal obligation to sign an insurance contract with the importer, considering that the safety risk in the entire delivery process must be borne by the export company.
The company chooses to invest part of the transportation insurance in the daily transportation work to avoid the safety risks in the transportation of goods.
Specially mark relevant words in the contract. For example, if VAT is to be excluded, the words “delivery after tax payment, VAT not paid” should be added to make the relevant contract terms clear and definite.
In the process of signing the contract of carriage, it should be noted that the above delivery address is clear, because unless the two parties have a contract, the export company cannot claim reimbursement from the buyer for the cost of loading and unloading goods at the destination.
Under the delivery conditions of DDP shipping terms , the two parties agreed that the exporter will deliver the goods at the designated place after the exporter has gone through the export customs clearance procedures.
This actually means that the exporter needs to ship the goods to the domestic market on the importer’s side. In this case, if it is difficult for the exporter to go through the import formalities directly, he can also ask the buyer for assistance. If there is a real difficulty, then the DDP term should not be used.
When you find a China freight forwarder, remember to ask him if he can provide you with DDP shipping terms.
