What’s DDP, how it works?

November 2, 2022

There are 11 Incoterms in total, which one is most friendly to the buyer? DDP.

DDP is short form for”Delivered Duty Paid”. A door to door shipping service, the seller assumes all responsibilities and costs for delivering the goods to the named place of destination.

Some new buyers who never import from China may want to learn more about DDP, this article will be a complete guide for you to know it.

1> What is DDP?

2> What’s the Obligation for buyer and seller?

3> How DDP works?

What are DDP in shipping?

Incoterms DDP: Delivered Duty Paid

Named Place Required: Place of Destination

Applies to: Air Ground Rail Sea and inland waterway

Incoterms DDP Shipping

Under the Delivered Duty Paid (DDP) Incoterm rules, the seller must pay both export and import formalities, fees, duties and taxes. it means that the seller handle all relevant import procedures and directly sends goods to your appointed destination, such as your home, your company, your warehouse, etc.

The seller is not obligated to insure the goods for pre-carriage or main carriage.

The buyer is free of any risk or cost until the goods are unloaded from the vehicle at the named place of destination, usually the buyer’s place of business.

DDP is the only Incoterms rule that places responsibility for import clearance and payment of taxes and/or import duty on the seller.

light bulb: The seller is responsible for all costs and risk until the goods are unloaded.

What’s the Obligation for buyer and seller?

Seller’s Obligations

Goods, commercial invoice and documentation

Export packaging and marking

Export licenses and customs formalities

Pre-carriage and delivery

Loading charges

Main carriage

Proof of delivery

Import formalities and duties

Cost of all inspections

Delivery to named place of destination

Buyer’s Obligations

Payment for goods as specified in sales contract

Assist seller in obtaining any documents or information necessary for export or import clearance formalities

How DDP works?

Through the example, you may know DDP clearly.

You bought 200pcs Erowa U20mm slotted brass holder from AmirTool, $25 for each, and want the goods sent to your factory in Ohio.

Under the DDP delivery term, AmirTool will deal with all the things for you, including:

Arrange trucks to send Erowa brass holders from the factory to Port of Shenzhen.

Handle export customs declaration, including random customs inspections.

Arrange shipping from Port of Shenzhen to Port of Cleveland.

Handle import customs clearance and pay all import duties and taxes.

Send your goods from Port of Cleveland to your factory in Ohio.

So the total cost would be: $25/piece*200pieces=$5000

All you need to do is wait for your goods at your warehouse and actively assist AmirTool so we can obtain the import license or other official documents required and deal with import customs clearance for you.

While under DDU or DAP delivery term, AmirTool will first ship your goods to Port of Cleveland. After you go through customs clearance, we will help you send the cargo to your factory in Ohio. So you have to:

Buy customs bonds

Declare to the customs

Prepare and submit customs declaration documents (B/L, Commercial Invoice, Packing List, Arrival Notice, etc.)

Pay import duties and taxes when receiving goods

If DDU price $23.5 for each Erowa brass holder, and import duties and taxes in this example are totally $1000, then total cost:

$23.5/piece*200pieces+$1000=$5700

AS you can see, even DDP price bit higher than DDU price, it still better while counting total cost. What’s more, forwarder offer different options, sometimes DDP price even lower than DDU price. So, the point is, always calculate all the costs from the seller to your hands.

The End

We hope that this article can give you a clear understanding of DDP. If you have any questions, you can leave us a comment.

We are AmirTool, leading workholding fixture manufacturer in China. We offer Erowa System 3R compatible tooling with competitive prices. Also, self-design fixture and mold making is also available. Just feel free to CONTACT US whenever you need support for CNC/EDM tooling. We can offer you good solutions to machining problems.