DDP Incoterms 2020 : A Few Quick Points
- Delivered Duty Paid (DDP) Incoterms works on any type of transport (air, land, rail, sea, etc.)
- DDP can also be used for multi-modal transport routes
- Risk transfers from seller to buyer when the goods are made available to the buyer after import ready of unloading at the named place of the delivery
- The seller must arrange for carriage to the agreed destination (named place)
- The seller must pay for transport costs to the agreed destination (named place)
When DDP is used in a sales contract, the named place is mentioned. For example, if a company in England is selling on DDP terms to a company in Spain and the seller has agreed to deliver to the buyer’s warehouse – the sales contract would look like:
DDP (Buyer’s warehouse Madrid, Spain, Incoterms 2020)
The DDP term places the maximum amount of risk on the seller in terms of both costs and liabilities.
DDP Incoterms: Delivery & Transfer of Risks
Delivery happens when the seller makes the cargo available at the agreed place ready for unloading after clearing import. The seller has to bear all the risks associated with the transport of the cargo up to that point.
DDP Incoterms: Insurance
There are no obligations for either the seller or the buyer to purchase insurance when transacting under DDP terms.
DDP Incoterms: Carriage
The seller must arrange and pay for carriage to the named place of the destination. The seller must abide by laws and meet all obligations relating to transport security regulations.
DDP Incoterms: Customs clearance
The seller must meet the obligations of export and import Customs clearance. This would mean that the seller will have to manage and pay for all formalities like licenses, security checks, inspections and other document submissions as required. However, the buyer would have to provide any necessary assistance to allow the seller to execute Customs clearance. If the buyer is indeed called upon to provide assistance, however, it would be at the seller’s cost.
DDP Incoterms: Packaging & Marking
Seller must ensure and pay any costs related with ensuring that the cargo is delivered in acceptable condition. This would mean the seller has to pay for quality checks, weighing operations and/or counting etc. The seller must package the goods at the seller’s cost.
DDP Incoterms: Cost allocations
The allocation of costs between buyer and seller are as follows:
- Any insurance cover required or requested
- Any costs incurred due to a failure to give reasonable notice to seller when it is agreed that the buyer is allowed to choose the time for departure from origin or receiving at destination
- Any costs related to unloading the cargo from the transport upon arrival
- Transport costs to the named place
- Transport security related costs
- Cost of providing usual proof of delivery
- Duties, taxes and other costs related to export and import
- Any costs involved in obtaining documents for export and import clearance
What is the difference between DDP & DPU Incoterms?
Delivered at Place Unloaded is a new Incoterm introduced in the 2020 version. The main difference between DPU and DDP are:
- Under DPU terms, the seller has no requirement to clear the cargo for import
- Under DPU terms, the seller has to manage the risk of unloading the cargo at the place of delivery
You can find a full introductory article on Incoterms 2020 here.