What is DDP incoterms?

Sharline Shaw

Delivery Duty Paid (DDP) incoterms are the seller’s responsibility to deliver goods. Sellers cover all costs arising from the delivery of goods to the buyer’s country and the import clearance.

We have total solutions for the buyer and seller to solve the international trade terms, including the DDP shipment. It’s important to be familiar with the DDP terms of the countries where you are shipping the goods, to avoid customs issues and paying too much in taxes.

In this article, you will learn about DDP incoterms. Is it true this term is worry-free for buyers? Less risk for a buyer?

So, let’s find out!

What is DDP

What is DDP incoterms?

DDP meaning is the seller agrees to charge the buyer at the full federal customs duties rate for the goods or services. DDP rules are all the seller bears.

The seller delivers the goods or services to the buyer all the costs, who can then pay the duty. Delivered Duty Paid DDP is an agreement between the supplier and the buyer. It is easier and less risky for buyers to source goods.

If a supplier agrees to charge you the federal rate. They are willing to follow the shipment customs formalities policies associated with this. 

When to use DDP incoterms?

When to use DDP

Based on incoterm 2020, DDP incoterm is a maximum obligation to the seller. And can be used in any mode of transportation shipping terms: air, sea freight, etc.

The seller handles costs and risks involved in transporting the goods, including paying customs duties or taxes.

The buyer has to take over the goods within a reasonable time after arriving at the named place. Arriving means that the goods have arrived at the named place.

What are the Buyers and Sellers’ Responsibilities with DDP incoterms?

The responsibility for paying any import duties, value-added tax, and other charges related to the goods fall on the buyer. The buyer can use DDP incoterm if the supplier agrees to charge at the federal rate.

But, the buyer must keep detailed records of the transaction to prove the goods were purchased and imported at the national rate.

Pros and Cons of DDP incoterms


  • Saves time: DDP incoterms can speed up the import formalities process.
  • Increased security: Documentation is required for customs clearance, making it more secure.
  • Also applies to services: When importing services, you can use DDP incoterms to save time and increase efficiency.


  • Documentation required: You must keep detailed records of the import transaction.
  • Fees and paperwork: Your company has to follow extra paperwork. And pay the same fees for DDP shipping as standard customs documentation.
  • Potential for errors: DDP incoterms have never been audited by the CBP, Custom Border Protection. You can’t be 100% sure the paperwork is correct.

 A Fast , Easy and Cheap Way to Ship from China 

Do not hesitate to contact Leeline Sourcing at any time regarding your shipments from China.

DDP incoterms Risks

There are no audits of DDP incoterms, so we don’t know how accurate the documentation is.

There is a risk that your documentation could be inaccurate. And the importer could illegally import your goods through fraudulent documentation. 

You also have to pay the same fees for using DDP incoterms and standard customs documentation.

DDP incoterms Example

The B2B platform Alibaba provides DDP incoterm to support their seller selling globally.

The service is mutually beneficial for the seller and buyer.

The seller controls the export, allowing them to control costs to maximize profit. Seller can choose the transport on the cheapest option. The buyer does not necessarily reap these benefits, though.

Purchasing Delivered Duty Paid is a great option for inexperienced buyers. It allows the buyer to organize the sale to their customers or use merchandise they are about to receive. 

The buyer doesn’t have much responsibility until their goods fully arrive. They are worry-free throughout that time, because the risk transfers to the seller, buyer less risk.

DDP incoterms Risks

FAQs about DDP

Who pays freight on DDP?

The seller has to pay for freight. The seller handles these charges from when the goods are delivered to the port of entry. And they clear the customs process in the destination country.
The seller may hire a customs broker / CBP to help them with the customs process.

What are the payment terms a factory requires when shipping DDP?

A supplier may need cash or a letter of credit from the buyer before the goods are sent to the buyer’s country.
The buyer will be required to put up a bond, letter of credit, or some other form of security for the amount of the export document. The supplier will then take the bond, letter of credit, or other forms of security and use it to pay the freight charges.

Does DDP include unloading?

Yes. The importer is required to unload the goods at the port of entry. You have to hire a customs broker to unload the goods and pay them a fee for their services.

How does DDP work?

The buyer, who is importing the goods dutiable under the federal rate, uses the CBP to determine if the goods are eligible to be charged the federal rate.
After the goods have been cleared, the importer submits a customs release through the supplier. This release agrees that the CBP will release the goods to the supplier.
The supplier then submits a customs entry through the CBP stating the date the goods were released and the amount was released. The importer doesn’t have to do anything.

Why is DDP used?

With DDP, the buyer makes sure the goods are dutiable and eligible to be charged the federal rate.
The supplier has to handle the export document, the freight charges, and the customs entry.

What’s Next

DDP incoterms is a great way to import goods from China to any country. It is quick and easy. As a buyer, all you have to do is make sure the goods are dutiable and eligible for federal rates.

If you need to ship the goods, you can contact us. We will help you ship your goods safely on any incoterms rules to your named destination. 

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Article by:

Sharline Shaw

Hey I'm Sharline, the founder of Leeline Sourcing. With 10 years of experience in the field of sourcing in China, we help 2000+ clients import from China,Alibaba,1688 to Amazon FBA or shopify. If you have any questions about sourcing , pls feel free to contact us.