DDP: the seller is responsible all the way to the buyer's warehouse
The DDP delivery term means that the seller delivers the metal to the named place at the buyer's and himself completes import clearance with duties and taxes.
Risk passes at the moment when the cargo is placed at the buyer's disposal at the place of destination, still not unloaded. For the buyer this is the most convenient basis: he receives rolled steel almost at his own gate and does not deal with customs.
DDP delivery terms: what the abbreviation means
DDP — Delivered Duty Paid, "delivery with duty paid". The named place is not necessarily a warehouse: it may be a terminal, a production site or a specific address. The wording in the contract matters, because "to the terminal" and "to the warehouse with unloading" are different scopes of work and different costs.
Obligations of the seller under DDP:
- arrange and pay for carriage to the named place, including the last leg;
- complete export clearance in the country of departure;
- complete import clearance in the country of destination;
- pay import duties and taxes connected with the import;
- hand the cargo over to the buyer at the agreed place without unloading the vehicle.
Obligations of the buyer: accept the cargo, unload it and then dispose of the metal as he sees fit.
DDP is the only Incoterms term where import clearance rests with the seller. That is both the main reason why the basis is chosen and the main source of problems for the seller.
Duties and taxes
The payment at customs does not come down to a single amount. The customs value of the batch, the rate under the HS code, the import tax and clearance fees are calculated. Under DDP the seller closes all of this, so the buyer sees one price but does not see its structure — if they wish, the parties can agree to break down the customs part as a separate line.
Import VAT is a frequent subject of a separate proviso. By default under DDP the seller closes the tax, but the parties often shift it to the buyer: a resident buyer can deduct the tax, while a non-resident seller only loses time on it. If there is no proviso, it is too late to argue after the import.
The rate is tied to the HS code and the country of origin, and anti-dumping measures apply to some positions. It is worth checking the code and the measures before signing the contract: a change of rate between the trade and the import falls on the seller.
Seller's risks
Under DDP risk passes late, so the seller carries it along the whole route: sea or rail, transshipment, storage, the last mile. If the cargo is damaged in transit, sorting it out with the carrier and the insurer is his task.
A separate layer is the customs one. To clear the import, the seller needs a status in the country of import or a reliable representative, security for payments and an understanding of local requirements. A delay at inspection means idle transport and storage costs, which are also his.
The seller also bears the currency risk himself: he has received a fixed "all-inclusive" price, while the costs of carriage and clearance may be in another currency. It is not worth inflating the price in advance without reason, but it is also wrong to regard DDP as an "ordinary basis".
| Obligation | EXW | DAP | DDP |
|---|---|---|---|
| Removal from the seller's warehouse | buyer | seller | seller |
| Main carriage | buyer | seller | seller |
| Import clearance | buyer | buyer | seller |
| Duties and import taxes | buyer | buyer | seller |
| Where risk passes | at the seller's warehouse | at the place of destination | at the place of destination |
| Unloading | buyer | buyer | buyer |
The difference between DAP and DDP is exactly in import clearance and payments. If the seller is not sure that he can clear the import, DAP is safer: the obligations are almost the same, except for the customs of the country of destination.
When to choose DDP
DDP suits the buyer in three cases. First — the company has no foreign trade department of its own and no clearance experience. Second — a single invoice and a single price to the warehouse are needed, without surprises at customs. Third — the supplier already ships metal to this country and knows the requirements.
The seller should take DDP when he has his own representative in the country of import or a reliable broker, when the margin covers customs and logistics costs, and when the "to the warehouse" price helps win the trade. For one-off deliveries to an unfamiliar country the basis is risky.
There are also situations where DDP is better not used: the goods are under anti-dumping measures, the buyer wants to recover the import tax while the seller is non-resident, or the route passes through several borders.
In an order on the exchange the basis is stated before the trade and is transferred into the trade without renegotiation. If you have chosen DDP, both parties must understand that the seller closes the customs part.
Frequently asked questions
What does DDP mean for metal delivery
Delivered Duty Paid: the seller delivers the rolled steel to the named place at the buyer's and pays import duties and taxes. The buyer accepts the cargo and unloads it.
Who pays duties under DDP delivery terms
The seller. He also completes import clearance. The buyer does not take part in settlements with customs, unless the parties have agreed otherwise.
Where risk passes under DDP
When the cargo is placed at the buyer's disposal at the agreed place and not unloaded. Until that moment the seller is responsible for its safety.
How DDP differs from DAP
Under DAP import clearance and payments are on the buyer's side, under DDP on the seller's side. The point at which risk passes is the same for these bases.
Under DDP, can it be agreed that the buyer pays the import tax
Yes, this is a common proviso. By default the seller closes the import tax, but the parties may allocate it differently and fix this in the contract.
Is it necessary to insure the cargo under DDP
Incoterms does not oblige the seller to buy insurance, but the risk up to the place of destination rests with him. So the seller usually insures the batch himself or bears the losses out of his margin.
What to do if the seller could not clear the import
This is a dispute between the parties to the contract, not with the exchange: the platform records the trade but does not deal with customs. To reduce the risk, take a basis without import clearance on the seller.
What to do next
- Incoterms 2020: delivery bases in plain words — all the terms in one table.
- FCA, CPT, CIP — bases where the seller pays for carriage and risk passes earlier.
- EXW: self-pickup from the seller's warehouse — the basis opposite in its obligations.
- How the exchange works — how the basis and transport get into the trade.
- Open an account — registration is free.