The use of international trade intercoms and other documentation has started since humans are doing the transportation of goods. However, it gathered pace with the e-commerce industry revolution. Understanding the trade intercoms will enable the sellers or buyers to better coordinate freight planning for the import and export across borders. Delivery duty paid hold a special place in international trade and are the most reliable and smooth shipping intercom.
DDP known as delivered duty paid is an international trade terminology that refers to a freight where the seller accepts total responsibility and expenses for delivering the goods to the entitled destination.
Delivered duty paid has lesser process complications as the two-way coordination between buyers and sellers is minimal. As the major responsibility is on the seller’s side.
DDP Incoterms and Responsible Party
DDP ship clearly has the terms of transporting the goods to the respective destination with delivered duty paid. It clearly states the risk and responsibility are on the seller’s head. Under ddp delivery services the seller is responsible for paying duties and taxes, clearing customs, organizing all shipments to the destination, import fees, duties, clearance, and any related fees with the DDP ship.
The seller undertakes all risk and accountability until the goods are delivered duty paid from the freight at the final destination decided between both buyer and seller upon the time of agreement.
When To Use DDP ?
DDP shipping can be used in either the mode of transport including air or sea freights. Arranging and clearing customs for imports can be problematic in countries with intricate or rigid import procedures. Since ddp delivery services require that the seller clear imports duties and documentation in the destination country. It works finest when the seller has country-wise knowledge for import clearance making the overall process simple.
We can say that the products offered under ddp ship is the option that is more suitable to the buyer, than the seller.
More Highlighted Benefits of DDP are As Follows:
- The foremost benefit of the ddp delivery services is that the buyer is safe from fraud and scammers. As in case of the ddp delivery the seller is responsible for all the risk and cost till the delivery of the product to the customer, so there is less chance of fraud with the seller. The time and cost involved in the ddp shipments makes it less vulnerable for the scammers.
- The second benefit of the ddp shipments to the buyer is that he has less responsibility towards the product to be deliver. As ddp delivery services cover all the risk and cost of the product till the delivery to the customer. Usually the buyer has less experience to tackle with the custom and clearance department at port. The seller is responsible for the clearance of the product at the destination so the seller is tension free, and will only have to pay for the delivery of the product to him.
- The third most important benefit of ddp service, is that under ddp service the product is deliver safely to the customer and the packaging quality is much better. Reason being, since the seller is responsible for the cargo till the delivery of the product to the customers, he makes better packaging arrangements, as he has to bear any loss of the product in transit till the product is deliver to the customer. In ddp delivery services there is usually less sales return as the best product is sent, in the safest packaging using the fastest route available.
- Fourth most mentioned benefit of the ddp delivery service to the buyer, is that the buyer has less risk involved. Hence the buyer can concentrate on other matters, as product delivery cost and risk is not his concern.
Responsibilities of seller under Delivered Duty Paid Incoterm
- First most responsibility or risk for the seller is that he is responsible for all the cost and risk involved. In shipment of the product till it reaches the customer. DDU delivery duty Unpaid, the seller has lesser responsibility. In ddp shipments all the risk is on the seller.
- The second most responsibility on the seller is he has to deal. With all the custom and international fees and duties on the product. If the seller is not experienced, he might face loss, as different countries have different regulations and duties charts. Demerges are a concern for the seller in ddp shipments. Delay due to any reason will add to the cost of the seller.
- Safety of the product is the responsibility of the seller till the product is delivered to the customer. And damage during the transit of the cargo will only add up. The cost of the seller in shape of sale return.
- Storage of the product during the transit of the cargo till its delivery to the customer is the responsibility of the seller, and hence will add up to the cost of the seller.
Advantages and Disadvantages of a DDP Agreement
Planning to do international trade and looking for the advantages and disadvantages of the ddp delivery services as a buyer. Here is the list to look upon:
DDP Advantages for the Buyer
The buyer is not liable for paying any delivery costs, taxes, or unknown charges of any kind. That take place during the DDP ship and delivery process. This can be beneficial, as there can be unidentified costs when shipping, as inspection fees can be varying for both export and import countries. When purchasing under ddp delivery services, this risk goes away. And if still there is any discrepancy that will be payable by the seller.
In DDP delivery services, there are no additional costs to calculate for. DDP specify that the buyer is compensating for the delivery cost and duties into the value of the goods. Once the goods have safely reached the destination port There are no additional costs the buyer will be responsible to pay.
After the goods are DDP ship. The buyer is simply require to wait for their freight to arrive, and receive it. All the stress goes to the buyer during the transit and ultimately to the decided destination port.
In delivery duty paid, the buyer can assemble their purchase contract in a way to reduce the peril of shipping delays and incompetent logistics company issues to make the DDP ship a success.
DDP Disadvantages for the Buyer
The seller should be an expert for the goods to delivery duty paid. As the customs clearance and import taxes are paid with sellers are competent. If the freight forwarder is not an expert, then the over DDP process can be complex making the buyer panic.
If the freight forwarders lack credentials, mistakes can lead to tragedies quickly. Thus, increasing the overall cost of the DDP ship. The creepy thing a buyer requests to consider is the lowest possible charges. And the imperfection can rectify issues making a sad experience shaking the confidence of the buyers.
Delivery time is also crucial for cost reduction. DDP Incoterms eliminates the chance for the buyer to handle. Delivery time or recognize opportunities to speed up the delivery process. So, an expert freight forwarder can help in making the process free of delays and issues.