Delivered Duty Paid (DDP) - Explained
What is Delivered Duty Paid?
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Table of ContentsWhat is Delivered Duty Paid (Incoterm)?When is Delivered Duty Paid Used?Academic Research on Delivery Duty Paid - Incoterm
What is Delivered Duty Paid (Incoterm)?
Delivery duty paid is a contract term. It means the seller of a good is responsible for bearing all the costs involved in delivering the good to an agreed upon destination. This ensures the seller would pay for all the expenses including transportation, insurance, imports and exports duties, and other required taxes.
Back to: OPERATIONS, LOGISTICS, & SUPPLY CHAIN MANAGEMENT
When is Delivered Duty Paid Used?
DDP is a shipping agreement. The seller and the buyer finalize the deal only after agreeing on all the payments and place of delivery. The supplier provides the product, makes all the required documents including sale contract, takes care of the packaging, obtains the export clearance, pays for all the transportation required for sending the product to the agreed destination, fulfills the export, import and customs requirements and obtains the appropriate permission from the authorities in destination country. They also need to arrange the proof of delivery and pay all fees related to the inspection.
Although the responsibility of unloading the good is on the buyer once it reaches the destination, the supplier needs to inform the buyer once the product is delivered. The supplier is also responsible for any damages or loss during transportation and needs to pay for it. Customs rule varies from one country to another. In some countries, the customs clearance procedure is extremely complex and bureaucratic, and it becomes impossible for the supplier to obtain the clearance in the foreign land. In such cases, it is always advisable that the buyers take the responsibility, as they possess the intimate knowledge of that locality and the requirements for clearing customers. The seller must closely scrutinize the destination countrys customs rule before entering into a DDP agreement. The customs do not consider the fact that a shipment is DDP while examining the customs clearance. The decision of the customs may delay the delivery, or the seller might need to opt for another delivery method causing additional charges.
Academic Research on Delivery Duty Paid - Incoterm
- Incoterms 2010 and the mode of transport: how to choose the right term, Malfliet, J. (2011). InManagement Challenges in the 21st Century: Transport and Logistics: Opportunity for Slovakia in the Era of Knowledge Economy(pp. 163-179). City University of Seattle Bratislava. This paper regards the use of various terms under the Incoterm system. This system is devised to help standardize the language of international trade. The authors goal with this paper is to explain the logic as to the use of these terms, and to also examine how certain situations necessitate the need for certain words in a shipping context.
- Complex Issues regarding the Role and Importance of Internationally Codified Rules and Incoterms., Cruntu, C., & Lpdui, M. L. (2010). Petroleum-Gas University of Ploiesti Bulletin, Economic Sciences Series,62(1). This paper provides an analysis of the terminology created for use in simplifying and standardizing the language of international shipping. The authors help to identify and explain some of the more difficult areas regarding this system. They also offer an explanation of how these terms define the rights and responsibilities of each party an international shipping situation. The current status of this system and its usage is also examined.
- Incoterms and UCC Article 2Conflicts and Confusions, Spanogle, J. A. (1997). The International Lawyer, 111-132. This article attempts to clear up some of the more confusing situations that can occur when the INCOTERMS system of shipping language meets the language of the Uniform Commercial Code. The author addresses complex and often contradictory terms individually and through the lense of established precedent.
- INCOTERMS 2010, Ramberg, J. (2011).Eur. JL Reform,13, 380. This article discusses the continuing development of the INCOTERMS system of shipping language. While the system is officially updated about every 10 years, the author suggests that continual changes in international trade cause a constant, but informal, system of changes in usage of INCOTERMS. This article looks at those changes and analyzes the environment that necessitates these revisions. Recommendations are also made.
- Business environment factors, incoterms selection and export performance, Hien, N., Laporte, G., & Roy, J. (2009). Operations and Supply Chain Management,2(2), 63-78. This paper goes into detail on the use and explanation of INCOTERMS. By addressing the creation and evolution of this system, the author is able to explain its current usage. Research into actual practice helps clarify many of these terms. This article was created through interviews with INCOTERMS experts.
- The possible influence of the shipper on carbon emissions from deep-sea container supply chains: An empirical analysis, McKinnon, A. (2014). Maritime Economics & Logistics,16(1), 1-19. This article looks at the ability of deep-sea container shippers to reduce their carbon emissions. By using questionnaire data, interviews, and focus group discussions, the author examines the entire supply chain to make carbon-reducing recommendations. The study finds that 40% of shippers measure their CO2 levels while only 6% have plans to actively reduce their carbon emission levels.
- Managing Incoterms 2010 risks: tension with trade and banking practices, Bergami, R. (2013).International Journal of Economics and Business Research,6(3), 324-338. The paper shows that while INCOTERMS have made considerable progress in resolving conflicts in the language of international shipping, there are still numerous conflicts that arise in the banking function of these firms. Concerns are analyzed and recommendations are made to reduce risk and modernize practices for all parties.
- The International Chamber of Commerce INCOTERMS 1990-A Guide to their Usage, Gabriel, H. (1999). VINDOBONA J. INT'L COM. L. & ARB.,3, 61-63. This paper serves as a straight-forward guide to the international commerce terms (INCOTERMS). This system helps to standardize the language of international shipping while properly determining the responsibilities and rights of each party during the shipping process.
- International commercial terms-Incoterms 2010, Eldovia, E., Vukainovia, M., Teia, M., & Bijeli, S. (2015). In2nd Logistics International Conference, Belgrade, Serbia. Google Scholar. This paper offers an introduction to the international commerce terms (INCOTERMS) system. It also provides some insight into the theory and application of these terms in certain circumstances. The newest version, INCOTERMS 2010, is also examined for both practical use as well as its impact on local and international trade.
- Analyzing inventory cost and service in supply chains, Van Ryzin, G. J. (2001). Columbia Business School Press. (see http://www. columbia. edu/ gjv1/invnote4. PDF). This article employs a model that makes it easy to see the often subtle impact that inventory can have on the operation and structural elements of a supply chain. Inventories are defined, equations for measuring their costs are examined, and methods for efficiently coping with inventories are recommended.
- Incoterms 2010: what you really need to know, Lane, S. (2012). Business Credit,114(6), 8. This article addresses many of the changes included in the 2010 update of the international commercial terms (INCOTERMS). This article briefly addresses these changes with easy-to-understand charts. The author also provides a short list of complex issues that have yet to be addressed by INCOTERMS.