The international trade terms are commonly used in trade processes and greatly assist in the smooth progression of trade. There are various trade terms, and today, I'll introduce the trade term DDP, which stands for Delivered Duty Paid. Let's take a look together.
DDP trade term stands for Delivered Duty Paid, which means "delivered duty paid." It refers to the seller delivering goods, not unloaded from the transport at the specified destination, to the buyer. The seller bears all risks and costs of transporting the goods to the destination, handles import clearance procedures, and pays import taxes, thus fulfilling the delivery obligation. While handling import clearance procedures, the seller may request the buyer's assistance, but the expenses and risks remain the seller's responsibility. The buyer must assist the seller in obtaining the necessary import permits or other official documents. If the parties wish to exclude some costs payable during import (such as Value-Added Tax, VAT) from the seller's obligations, it should be specified in the contract. The DDP term is applicable to all modes of transportation and represents the term where the seller assumes the most significant responsibility, costs, and risks.
What does the DDP price include?
The costs included in the DDP price are diverse, encompassing not only freight, insurance, and taxes but also storage and port charges. To mitigate risks in the DDP quotation, sellers might outsource shipping and customs clearance to freight forwarding companies when exporting goods. This is primarily because freight forwarding companies possess ample experience and can minimize risks throughout the shipping and clearance process.
Considerations for DDP:
1. Under DDP delivery terms, the seller delivers the goods at the specified destination after completing export customs procedures, effectively entering the buyer's domestic market. If the seller encounters difficulties in directly handling import procedures, they can request assistance from the buyer. However, if the seller cannot directly or indirectly obtain import permits or complete import procedures, the DDP term should not be used.
2. If both parties wish to exclude certain fees payable when the goods are imported from the seller's obligations, such as VAT, a clause to this effect should be explicitly stated, e.g., "Delivered duty paid, VAT unpaid (insert specified destination)," to make it clear.
3. The buyer is responsible for unloading the goods from the arriving transport at the specified destination, but the seller must ensure the goods are available for unloading. When signing the transportation contract, the seller should coordinate the delivery location specified in the transportation contract with the sales contract. If unloading costs occur at the specified destination according to the transportation contract, unless otherwise agreed upon, the seller has no right to demand payment from the buyer.
4. As the seller assumes risks before delivering at a specific location, both parties should ideally specify the delivery address at the designated destination as precisely as possible, preferably pinpointing a specific spot within the destination. If there's no agreement on a specific delivery point or if the delivery point cannot be determined, the seller can select the most suitable delivery point at the specified destination.
5. The seller is not obligated to arrange an insurance contract for the buyer. However, as the seller bears the risk throughout the entire transportation process, they usually mitigate transportation risks through insurance coverage.
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