Delivered Duty Paid (DDP)
This article is part of our blog series on the Incoterms® Rules, helping importers and exporters understand international trade terms. C J International is a full-service Customs broker and Freight Forwarder.
Meaning of Delivered Duty Paid
“Delivered Duty Paid” places the most responsibility on the seller out of all the Incoterms® Rules.
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.
Example of DDP
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.
More Resources on the Incoterms® Rules
The International Chamber of Commerce (ICC) has provided a very helpful illustration of the Incoterms® Rules that you can download for free. It shows how in working down the list of terms, risk progressively changes from the buyer’s responsibility to the seller’s responsibility.
The Incoterms® Rules consist of 11 trade terms, which are divided into two groups:
Terms that can be used for any mode of transportation:
- 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
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 encourages 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.