Delivered Duty Paid (DDP)
This article is part of our weekly blog series on the Incoterms® Rules — we will be looking at a new term every Tuesday
“Delivered Duty Paid” places the most responsibility on the seller out of all the Incoterms®.
DDP goes beyond the seller assuming costs and risks of carriage to an agreed upon destination (as in DAP and DPU), to fulfilling export, transit, and import requirements as well. If an importer wants a shipment to arrive at their facility with all carriage and delivery requirements taken care of (besides unloading), including export and import clearance and payment of all owed duties, they will want to ship DDP.
Note: Customs clearance must be completed in the country of destination (of the goods), which would require the seller to work with a Customs broker in that country. The parties should ship DAP or DPU if they want carriage and delivery to be arranged by the seller, while leaving import clearance to the importer/buyer.
The buyer is a café in Cincinnati, Ohio purchasing $1000 of whole coffee beans from a farmer in Brazil. The terms are DDP Cincinnati, requiring the seller to assume all costs and risks in arranging carriage to Cincinnati, as well as delivery to the agreed upon destination. The seller is also responsible for fulfilling export, transit, and import clearance requirements, including paying import duties and filing all necessary documentation to ensure compliance with relevant Partner Government Agencies (PGA’s), such as FDA and USDA.
The ICC has provided a very helpful illustration of Incoterms® that you can download here for free. It shows how in working down the list of incoterms, risk progressively changes from the buyer’s responsibility to the seller’s responsibility.
Incoterms® consists of a total of 11 trade terms, which are divided into two groups.
Group 1 consists of terms that can be used for any mode of transportation:
• EXW Ex Works
• FCA Free Carrier
• CPT Carriage Paid To
• CIP Carriage and Insurance Paid To
• DPU Delivered at Place Unloaded
• DAP Delivered at Place
• DDP Delivered Duty Paid – today’s topic!
Group 2 consists of terms that apply to sea and inland waterway transport only:
• FAS Free Alongside Ship
• FOB Free on Board
• CFR Cost and Freight
• CIF Cost, Insurance, and Freight
This blog series is intended to be a helpful introduction to international trade terms, not a comprehensive resource. C J International recognizes that the ICC is the only official source of definitions and explanations surrounding the Incoterms® Rules, and advises our clients and the shipping community to consult iccwbo.org and their educational materials for further details.
Incoterms® and the Incoterms® 2020 logo are trademarks of ICC. Use of these trademarks does not imply association with, approval of or sponsorship by ICC unless specifically stated above. The Incoterms® Rules are protected by copyright owned by ICC. Further information on the Incoterms® Rules may be obtained from the ICC website iccwbo.org.