Why does DDP matter?
DDP is ideal for buyers who want a completely turnkey solution—they receive goods at their location with no logistics involvement required. The seller handles everything: freight, customs clearance, duty payment, and final unloading. DDP eliminates buyer complexity and uncertainty; the buyer simply receives goods ready for use. For sellers, DDP requires significant logistics expertise and capital, making it suitable only for large, established exporters with international operations.
How does DDP (Delivered Duty Paid) work in logistics?
A buyer purchases goods from a seller under DDP terms to a named destination. The seller arranges and pays for all transportation, handles customs procedures, pays all duties and taxes, arranges final delivery, and may even handle unloading. The seller bears all risk and cost until goods are received by the buyer at the destination. The buyer simply accepts delivery with no further obligations or payments beyond the agreed DDP price.
DDP vs. other incoterms
- FOB (Free on Board) – Seller pays to loading port; buyer assumes risk once loaded
- CIF (Cost, Insurance and Freight) – Seller pays freight and insurance to port; buyer assumes risk once loaded (sea freight only)
- CPT (Carriage Paid To) – Seller pays freight to named destination; buyer assumes risk once handed to first carrier (all modes)
- CIP (Carriage and Insurance Paid To) – Seller pays freight and insurance to named destination; buyer assumes risk once handed to first carrier (all modes)
- DAP (Delivered at Place) – Seller pays all freight and duties to named destination; buyer assumes risk upon arrival at destination
- DDP (Delivered Duty Paid) – Seller pays all freight and duties to named destination and handles all customs; buyer assumes risk upon arrival with no remaining obligations
Example in practice
A beverage manufacturer in Bordeaux, France sells €80,000 of wine to a retailer in Tokyo, Japan under DDP terms to Tokyo (retailer’s warehouse). The Bordeaux seller arranges: (1) truck transport from Bordeaux to Le Havre port (€2,000), (2) sea freight from Le Havre port to Yokohama port, Japan (€6,500), (3) Japanese customs clearance and duty payment (€12,000), (4) truck delivery from Yokohama port to Tokyo warehouse (€1,500), (5) unloading at Tokyo warehouse. Total seller’s cost: €22,000. The seller handles all documentation, pays all duties, arranges unloading, and ensures goods arrive ready for the retailer’s use. The Tokyo retailer simply receives the wine at their warehouse with no further obligations or payments—everything is included in the agreed DDP price. The retailer takes possession and can immediately begin selling.