DDP (Delivered Duty Paid)

DDP (Delivered Duty Paid) is an Incoterms 2020 rule under which the seller delivers goods to the buyer's named destination, cleared for import and with duties and taxes paid, ready for unloading. The seller carries all costs and risks until that point, and the buyer only unloads. It places the maximum responsibility on the seller.

What DDP Means in Incoterms

Incoterms are a set of 11 rules published by the International Chamber of Commerce (ICC) that define who pays for and manages shipping, insurance, customs clearance and other logistics in an international sale. DDP is one of the seven rules that can be used with any mode of transport, and it is written with a named destination — for example "DDP [buyer's warehouse address], Incoterms 2020."

Under DDP the seller must arrange and pay for transport for the whole journey, handle export, transit and import customs formalities, and pay the import duties and taxes. Risk passes to the buyer only when the goods are at the buyer's disposal at the agreed destination, ready for unloading. DDP is the only Incoterms rule in which the seller pays the destination country's duties; under every other rule, the import burden falls on the buyer.

That makes DDP the opposite end of the scale from EXW (Ex Works), where the seller simply makes the goods available at its own premises.

DDP vs DAP vs EXW

DDP and Landed Cost

Landed cost is the total price of a product once it has arrived at the buyer's door: the price of the goods plus insurance, freight, tariffs, taxes and other fees. Under DDP, the seller builds most of that into its price. Under EXW or DAP, the buyer pays some of those costs separately, so two quotes on different Incoterms cannot be compared until they are brought to the same landed-cost basis.

When Does DDP Make Sense?

• For the buyer, DDP is simple: one price, no customs paperwork. The trade-off is less visibility into freight and duty charges, which are built into the seller's price.
• For the seller, DDP means acting as, or appointing, the importer in the buyer's country. Some customs authorities require a local importer to clear goods; in those cases DDP cannot be used and DAP is the usual alternative.
• Tariff changes land on whoever pays duty — the seller under DDP, the buyer under every other rule — so confirm how mid-contract duty changes are handled.
• Always name the rule and the place. "DDP" alone, without a destination and the Incoterms edition, leaves room for dispute.

Frequently Asked Questions

What does DDP mean in shipping?

DDP means Delivered Duty Paid. The seller arranges transport to the buyer's named destination, clears the goods through export and import customs, and pays the import duties and taxes. The buyer's only obligation is to unload the goods on arrival.

What is the difference between DDP and DAP?

Both deliver the goods to the named destination, ready for unloading. The difference is import clearance: under DAP the buyer clears customs and pays import duties and taxes; under DDP the seller does.

What is landed cost?

Landed cost is the total cost of a product once it arrives at the buyer's door — the price of the goods plus freight, insurance, tariffs, taxes and other fees. Comparing suppliers on landed cost rather than unit price shows the true cost of sourcing from each.