DDP is one of the rules which have been developed by the International Chamber of Commerce in hopes of standardising shipping options across the globe. DDP in shipping means “Delivered Duty Paid” and this term, which is widely used within international trade, describes a type of delivery wherein the seller takes responsibility for all risk and fees when it comes to shipping any goods until they reach their destination.
Typically, many companies will only use the DDP method when shipping goods by air or sea freight. This option actually provides many benefits to the buyer, as they will be subjected to far less risk, liability, and costs if anything goes awry during the shipping process. Although Delivery Duty Paid shipping is good for the buyer in these aspects, it does pose a large burden upon the seller due to profits becoming reduced if the process is handled poorly.
International shipping comes with a wide range of complex rules. With each country having their own set of rules and laws when discussing customs, it can become extremely confusing for international buyers and sellers. Therefore, Incoterms like DDP being internationally recognised helps to streamline the international shipping process – making these terms commonplace when shipping across borders.
Delivery Duty Paid shipping is a delivery agreement between the buyers and sellers of goods that places any risks and responsibilities that come alongside transportation of said goods on the seller until they are received by the buyer.
When using DDP services, buyers are not liable for the actual shipping costs, making customers more likely to purchase products internationally without the fear of being subjected to a scam or having to pay high taxes.
DDP shipping is used to protect the buyer – holding the sender responsible for the product until the customer receives what they have purchased.
When adhering to DDP Incoterms, the seller is obliged to:
When conducting a DDP trade, the buyer’s activities are limited. They can only:
What counts as an agreed place of delivery?
As detailed by DDP Incoterms, neither the buyer nor the seller has a maximum obligation of ensuring the goods are being sold and transported, and any insurance requirement is not explicitly laid out within the Incoterms rules. This crucial issue should be discussed and agreed upon as part of the sales contract and the terms of the sale.
Incoterms are terms that are specific to the logistics sector. Many of these terms are written in acronym form, and it can be confusing if you don’t know what they stand for – so this section is here to explain the differences between DDP, DDU, and DAP.
DDU, Delivery Duty Unpaid, requires the end consumer, the buyer, or the person receiving or importing the package to pay any duties that are incurred once the package enters the destination country. The seller pays all duties in the country of origin.
During a DDU delivery, customs will contact the buyer once their package arrives in the destination country, often prompting the buyer to visit the local post office to collect the package.
DDP is widely recognised as the better experience for customers, as this cross-border option takes all fees into consideration right away, allowing the seller or merchant to decide whether they pass those fees on to the customer by increasing the pricing of the product or simply pay the costs and fees themselves.
DAP, which is known as Delivered-at-Place, means the seller or merchant takes on all the costs and risks of delivering the goods they are selling.
Delivery Duty Paid (DDP) follows a fairly simple supply chain timeline. The seller retains most of the potential liabilities until any products arrive with the buyer. Throughout the timeline, four major steps are involved:
DDP is one of the most popular options for businesses when it comes to international shipping as it is an effective way of retaining returning customers. All parties assume less risk for each product being sent until they are delivered due to the need for more credible shippers and carriers being used, so using DDP is in everyone’s best interest from a sales perspective.
In contrast, if too many problems occur during the DDP process, the costs associated can actually make this shipping method unprofitable.
Do you run an eCommerce business and want to begin shipping internationally with a well-respected and highly experienced UK fulfilment company? Get in touch with The Delivery Group to see how you can access the best rates with DDP shipping.