International commercial terms, or Incoterms, are developed to simplify the global freight shipping process. And DDP shipping, as one of the most commonly used shipping methods, determines what obligations will be placed on the seller and thebuyer, respectively. What is DDP shipping? Here we offer a guide on the DDP explanation. Read on to get more details, so you won't be confused next time.
2. What Are the Seller's Obligations Under DDP Shipping?
3. What Do the Buyer's Responsibilities Include While Using DDP Incoterm?
4. What Are the Benefits of DDP Shipping?
5. Why Should Buyers Choose DDP Shipping?
6. Professional DDP Shipping Solutions Offered by Seabay Logistics
DDP stands for Delivered Duty Paid, an incoterm often used in global shipping transactions. The DDP agreement states that the seller (also known as the shipper) should assume all responsibilities, risks, and costs coming with cargo transportation until the buyer receives the cargo at the agreed destination.
DDP, as an incoterm, plays a big role in the international shipping industry. It was first introduced by the International Chamber of Commerce (ICC) with the intention of standardizing and simplifying global shipping. Indeed, it worked. DDP applies to all transportation modes (sea, air, or road), including the multimodal transportation. Under DDP, the seller will take up the maximum responsibility. Only after the cargo is unloaded at the destination place, the responsibility will be shifted to the buyer.
● Providing goods
● Picking-up & packing & labeling
● Preparing the commercial invoice
● Preparing documentation (in paper/electronic form)
● Arranging the transportation of goods
● Handling both import & export clearance
● Arranging cargo insurance (if there is a need)
● Paying for customs duties and taxes
● Covering other expenses associated with shipping goods (i.e., insurance fees, demurrage fees)
Under DDP Incoterm rules, when the goods are unloaded at the destination port, it turns to the buyer to take on the risks and costs. However, before the unloading, there still remains something the buyer should do:
● Helping the seller to get together the necessary documentation
● Negotiating what terms will be listed in the contract with the seller, including when and how to make a payment
● Figuring out whether the goods are subject to Value-added Tax (VAT) or Goods & Services Tax (GST) before deciding to ship DDP
● Making the payment
For buyers, DDP indeed brings various benefits. First and foremost, buyers are faced with reduced risks. What's more, buyers don't have to figure out ways to navigate complex customs clearance. Last but not least, the buyer does not need to spend their time on calculating taxes and duties.
Although it is not rested on the seller to purchase cargo insurance, the seller is always the one who handles insurance in order to avoid cargo damage and cargo losses. Cargo insurance means an extra layer of protection, reducing the buyer's financial losses to the minimum.
Other potential pitfalls may be found in customs procedures. Managing customs often requires extensive local knowledge. Complicated procedures and rapidly changing regulations add to the difficulty. A small mishap may lead to unwanted bills, customs holds, or even rejected shipments. However, with DDP shipping, the responsibility of clearing customs is transferred to the seller. In most cases, sellers will utilize their local resources to clear the goods smoothly.
Different duties and taxes represent another headache. For example, sometimes, the importing country will charge VAT/GST on the imports. With DDP, sellers will collect customs-related fees along with other shipping costs during the checkout. Buyers make a payment, and there is no more worry about handling customs fees. There is no specific rule as to when the payment should be made. The two parties should reach an agreement before delivery.
Different incoterms will lead to different shipping methods and shipping costs. It is still highly recommended that buyers choose DDP shipping because it can greatly save buyers' time and energy. With the contract of sale, the seller is legally bound to deliver the goods to the destination on time and ensure the goods are in fine condition. The intricacy of shipping cargo internationally would not be that intimidating if buyers decide to use DDP.
Ready to cut your busy work? We are well-versed in DDP shipping. You are absolutely welcome to outsource the most difficult shipping task to us. At Seabay Logistics, we have built a vast network of overseas agents who are quite familiar with changing customs regulations and requirements. Together we will provide DDP shipping solutions that include conducting logistics operations professionally, handling customs clearance smoothly, and avoiding unexpected delays. We also offer the most competitive freight rates. You can ask for an instant quote via our website and get started on shipping your freight today.
