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What Is 'Delivered Duty Paid - DDP'?

Delivered duty paid is a delivery agreement whereby the seller assumes all of the responsibility, risk and cost associated with transporting goods until the buyer receives or transfers them at the destination port. This includes paying for shipping costs, export and import duties, insurance and any other expenses incurred during shipping to an agreed-upon location in the buyer's country. 

BREAKING DOWN 'Delivered Duty Paid - DDP'

DDP is a shipping agreement that places the maximum responsibility on the seller. An example where DDP is applicable is for a courier service where the full supply chain cost is under control and with minimum cost variance. In addition to shipping costs, the seller is obligated to arrange for import clearance and tax payment, and import duty. The buyer and seller should agree on all payment details before finalizing the transaction, and it is important to state the name of the place of destination.

The seller arranges for transportation through a carrier of any kind. The seller is responsible for the cost of the carrier and acquiring customs clearance in the buyer's country, including obtaining the appropriate approvals from the authorities in that country. In addition, the seller may need to acquire a license for importation. However, the seller is not responsible for unloading the goods.

Seller Responsibilities

The seller’s responsibilities include providing the goods; drawing up a sales contract and related documents; export packaging; arranging for export clearance; satisfying all import, export and customs requirements and paying for all transportation costs including final delivery to an agreed-upon destination. In addition, the seller must arrange for proof of delivery and pay the cost of all inspections. The seller must alert the buyer once the goods have been delivered to the agreed-upon location. In a DDP transaction, if the goods are damaged or lost in transit, the seller is liable for the costs.

Shipping Requirements

DDP shipments require the shipper to obtain customs clearance. Prior to sending DDP shipments, the seller must determine the destination country's customs requirements. However, it is not always possible for the shipper to clear the goods through customs in foreign countries.

Customs requirements for DDP shipments vary by country. In some countries, import clearance procedures are complicated and lengthy, so it would be best if the buyer, who has intimate knowledge of the process, sets this up. If a DDP shipment does not clear customs, customs may ignore the fact that the shipment is DDP and delay in shipment. Depending on the customs  decision, this may result in the seller using different delivery methods that require additional costs.

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