Incoterms: Delivered Duty PaidPosted in Incoterms - 5 Nov 2018, 9:48 AM
As one of the rule determined by International Chamber of Commerce, DDP stand for Delivered Duty Paid which means seller is responsible for sending the cargo to the placed specified by the buyer and bears all the risk & cost including duties, tax, and to carry out all the customs permits. Usually, DDP is applicable for the courier services and used by the buyer who wants all the shipping activities carried out by the shipper. Although this rule seem easy for buyers but the shipping costs borne are also greater.
What makes different between Delivered Duty Paid compare with Delivered at Place and Delivered at Terminal are the import customs clearance and the cost of duties and tax borne by the seller. DDP term should avoid by the seller unless they very well understood about the local knowledge, unforeseen costs come from destination country. Some additional factors that should considered by exporters who using DDP term are storage and demurrage cost, foreign customs compliance, and legal issues. Storage and demurrage charges could be incurred due to delays by customs authorities or caused by air/sea carriers. In some countries, customs permits for import activities are complicated and bureaucratic.
Risk is transferred to the buyer once the goods are available to the buyer at the end of destination point as agreed from both parties. In addition, there is no obligation for the shipper to provide insurance for this rule.
Buyer obligations of Delivered Duty Paid are:
- Pay the price of goods based on the sales contract.
- Responsible for the cost and process of unloading goods.
- Inspect the cargo arrived and accept delivery document.
Seller obligations of Delivered Duty Paid are:
- Prepare commercial invoice and documents regarding the goods.
- Ensuring the arrival and the condition of the main carriage.
- Loading and deliver the goods to the destination point determined by the buyer.
- Take care all the shipping documents in order to get export licenses.
- Responsible for the cost of delivering goods, insurance (optional), export duties and tax, import duties and tax, customs formalities in the both origin and destination country, and cost of all inspections of goods.
- Notify the buyer if the goods have arrived and prepare delivery document as a proof that the goods have already been delivered.