DDP Freight

DDP Seller Responsibilities

In a DDP shipping agreement, the seller has several responsibilities to guarantee a successful delivery. These include things like:

• Verify that all risks, such as loss or damage to cargo, are financially covered up to the location of the delivery. 

• Handle export processes at the shipment location with all required protocols respected, like providing permits and documentation as needed for specific cargo items. 

• Assume any costs for Customs clearance procedures at the delivery location. If products are taxed due to a fluctuation in value (VAT), the seller also pays for this additional cost. 

• Ensure that products and goods arrive at the international location to properly cease liability. 

• Assume financial liability for the cost of transport from packing areas to delivery locations. 

• Organize and establish carrier contacts with any and all carriage companies that assist with the delivery of cargo.

Advantages of DDP Shipment

DDP shipping services are an efficient way to build a strong direct relationship between buyer and seller. DDP options take care of every step within international shipping. Some of the most significant benefits of DDP shipping arrangements feature:

• Streamlined Process: Cohesively handling all transportation requirements allows freight forwarders peace of mind and less work. DDP services guarantee that the shipping entity handles cargo pickup, quality maintenance, necessary paperwork and costs, and finally, the delivery logistics all under the same shipping agreement. 

• Fewer Risks Involved: DDP agreements assume liability for cargo up until the products have been successfully delivered to the buyer’s door. DDP solutions have a streamlined freight process for international shipments, so products are less likely to get lost or become unavailable to the consumer during transit. 

• Financial Transparency: Another benefit of DDP services is that the final tally is known as soon as the customer places an order. All potential cargo taxes and fees experienced during the exporting process are already included prior to purchase. This makes receiving cargo much simpler for importers, since they don’t need to be concerned about unexpected costs prior to receipt.

• Hands-Off Customer Experience: During a DDP shipping agreement, the buyer doesn’t need to worry about Customs complications or additional shipping requirements after the cargo has arrived in the country of delivery. Goods arrive directly at their door,  a huge draw for additional business.

What is Delivered-At-Place Shipping (DAP)?

DAP shipping, or Delivered-At-Place shipping, is a trade arrangement where sellers  assume financial responsibility for all costs and risks, absorbing all possible losses of transporting goods to a location. The contract states the seller is  responsible for documentation, packaging, unloading charges, export approval, and delivery to the location, regardless of if it’s a warehouse, factory, or port. 

The buyer assumes the cost and risk once goods arrive at their destination and are available for unloading. The buyer still pays for import duties, taxes, and unloading costs and is expected to provide documentation to Customs and import the shipment to the given country. DAP shipping can be a great arrangement for intermodal shipping. A DAP shipping arrangement allows for any transport mode (ocean, land, rail, etc.), applying to any combination of these transportation options.

DAP Seller Responsibilities

DAP shipping terms might seem very similar to a DDP and DDU contract, and that’s because many people use DAP and DDU shipping terms interchangeably. This is because, for both arrangements, the seller’s responsibilities will be more involved than the buyers. 

In many cases, DDU has essentially been omitted in incoterms since 2010 by introducing the more favorable DAP shipping terms, which cover many of the same functions of DDU. As a merchant who handles a lot of freight shipping, it’s important to understand what the seller’s responsibilities include in a DAP shipping arrangement. For DAP shipping, the seller is expected to: 

• Handle all export packaging/marking

• Provide goods, commercial invoices, and documentation

• Provide export licenses and Customs formalities

• Arrange details of pre-carriage and delivery

• Assume financial responsibility for loading charges and pre-shipment inspection

• Coordinate the delivery to named destination

• Provide proof of delivery to the buyer

  
  

Advantages of DAP Shipping

While a DDP arrangement gives the buyer more control over the shipping procedures, DAP shipping terms outline a contract that gives the seller more control over the entire freight process. Similar to many of the advantages of DDU, some of the attractive features of DAP shipping include:

• Buyer Awareness of Accountability: With a DAP shipping arrangement, the buyer knows who’s responsible for any additional costs that are incurred during the shipping process. According to the ICC, after the goods are accessible to the buyer, they’re liable for any risks and losses connected with the cargo. 

• Low Liability: DAP shipping terms also provide a low liability option and fairly broad contract for buyers wanting to transfer all risks associated with shipping onto the seller due to their reduced risk in buying goods.

• Cash Flow and Inventory Management: On the buyer’s side of the transaction, DAP shipping can help with expensive commodities that need consistent restocking from sellers. Buyers can leverage a DAP shipping agreement with sellers where the seller takes care of the shipment and the buyer pays once the goods arrive at the destination. By reordering often, sellers can have a bonded warehouse at the buyer’s location, simplifying inventory management and streamlining cash flow between both parties. Buyers can place smaller orders and have them taken care of quickly.