RESPECTING THE DDP INCOTERM: EXPLANATIONS
The DDP Incoterm defines the responsibilities of the seller and the buyer for the costs and risks of the trade.
SELLER’S RESPONSIBILITIES
The seller arranges for transportation through a carrier of any kind and is responsible for the cost of that carrier as well as acquiring customs clearance in the buyer’s country, including obtaining the appropriate approvals from the authorities in that country.
The vendor must provide confirmation of delivery, pay for inspections, and notify the customer when the products arrive at the agreed-upon place.
When the items are delivered to the specified location, the seller is responsible for making arrangements for evidence of delivery, covering the expense of all inspections, and notifying the buyer.
The DDP Incoterm is the Incoterm in which the seller has the most responsibility for the trade. The seller has more costs and responsibilities to bear.
It is also the only Incoterm where the seller has to take care of the customs formalities on import (duties and taxes, export and import clearance procedure).
In the Incoterms 2010 rules, the DDP Incoterm gives the seller the following responsibilities:
- Packing
- Loading at the factory or tax warehouse of departure
- Routing to a departure hub
- Loading of the main means of transport at departure
- Main carriage
- Unloading of main means of transport on arrival
- Routing to factory or warehouse of arrival
- Customs formalities on import (customs clearance procedure, duties and taxes)
MANAGING CUSTOMS
The shipper may not always be able to get the items cleared through customs in other nations.
Each country has different DDP shipping regulations. It is better if the buyer oversees the import clearance process because it can be challenging and time-consuming in some countries.
Customs may disregard the fact that a shipment is DDP and delay it if it does not cross customs.
Depending on the customs ruling, the vendor can then use alternative, more expensive delivery methods.
RESPONSIBILITIES OF THE BUYER UNDER THE DDP INCOTERM
Under the DDP Incoterm, the buyer’s responsibilities in relation to the trade are as follows:
- Main transport insurance
- Unloading at factory or warehouse on arrival
The DDP Incoterm is the Incoterm with the least responsibility for the buyer.