What is DDP?
Delivery Duty paid (DDP) is a delivery agreement under which the seller assumes all responsibilities, risks and costs associated with transporting goods until the buyer receives or transfers the goods at the port of destination. This agreement covers payment of freight, import and export duties, insurance and any other expenses incurred during delivery to the agreed place in the buyer’s country/territory.
Delivery duty Paid (DDP) is a delivery agreement under which the seller assumes all responsibility for shipping the goods until they arrive at the agreed destination.
The seller must arrange all shipping and related costs including export clearance and customs documents required to arrive at the port of destination.
In the event of unexpected delays, sellers face a wide range of risks, including VAT, bribery and warehousing costs.
DDP benefits the buyer as the seller bears most of the shipping responsibility and costs.
Understand Delivery Duty Paid (DDP)
DDP is a transport agreement that places the greatest responsibility on the seller. In addition to freight, the seller is obliged to arrange import customs clearance, payment of taxes and import duties. Once the goods are supplied to the buyer at the port of destination, the risk will pass to the buyer. Buyers and sellers must agree on all payment details and name the destination before closing the transaction.
DDP is developed by the International Chamber of Commerce (ICC) to achieve global shipping standardization; Therefore, DDP is most commonly used in international shipping transactions. The benefits of DDP are in favor of the buyer, because they have lower responsibilities and costs in the transportation process, therefore, it puts a great burden on the seller.
The Seller arranges for transportation through any type of carrier and is responsible for the cost of such carrier and obtaining customs clearance in the buyer’s home country/territory, including obtaining appropriate approval from the authorities of that country. In addition, the seller may need to obtain an import license. However, the seller is not responsible for unloading the goods.
The seller’s responsibility includes supplying the goods, drafting the sales contract and related documents, export packing, arranging export customs clearance, meeting all import, export and customs requirements, and paying all transportation costs, including final delivery to the agreed destination
The seller must arrange for proof of delivery and pay for all inspection costs and must notify the Buyer when the goods have been delivered to the agreed place. In a DDP transaction, if the goods are damaged or lost in transit, the seller shall bear the cost.
Manage the customs
Shippers are not always able to clear goods through foreign customs. Customs requirements for DDP shipments vary from country to country. In some countries, import clearance is complex and lengthy, so it is best to manage the process by a buyer who is familiar with it.
If the DDP shipment is not cleared, customs may ignore the fact that the shipment is DDP and delay the shipment. Depending on the customs decision, this could lead to different and more costly delivery methods for sellers.
Special notes on DDP
DDP is used when supply costs are relatively stable and predictable. The seller bears the most risk, so DDP is usually used by premium vendors; However, some experts believe there are reasons why U.S. exporters and importers should not use DDP.
For example, US exporters may be subject to a value-added tax (VAT) of up to 20 per cent. In addition, the buyer is eligible for a VAT refund. Exporters may also incur unexpected storage and demurrage charges due to delays by customs, agents or carriers. Bribery is a risk that can have serious consequences for the U.S. government and for foreign countries.
For US importers, the supply chain information of importers is limited because the seller and its freight forwarder control the transportation. In addition, the seller may mark up the price to cover the liability cost of DDP shipping or mark-up freight notes.
If DDP is not handled properly, incoming goods are likely to be checked by customs, causing delays. Delayed shipments may also occur, as sellers may use cheaper, less reliable shipping services to reduce costs.
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DDP for World is a full-service and shipping forwarder dedicated to assisting our clients in focusing and growing their businesses. We do DDP shipping since 2015 by handling home décor, Pet products, battery, power banks, DG cargo, general cargo and Amazon FBA forwarding service. We make your shipping easier and faster by Sea, Air, Express, Truck or Railway. If you have any questions or needs about DDP shipping from China freight forwarder, please feel free to contact us, we will serve you wholeheartedly.
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