What is the Difference Between DDP and DAP Shipping?

Table Of Content hide

1 What Is Delivered Duty Paid? DDP Incoterms

2 What Is Delivered at Place? DAP Incoterms

3 DDP vs DAP

4 Obligations for Buyer and Seller

5 Choosing between DDP and DAP

6 Best Practices for Using DDP or DAP in International Trade and Customs Clearance

7 What are the Risks Associated with DDP and DAP Incoterms?

8 Simplify International Trade with Egypt IOR

9 Resources

10 Frequently Asked Questions

In our previous article, we explained DDP (Delivered Duty Paid) in detail. Now, let’s take a look at the key differences between DDP and DAP (Delivered at Place). Understanding these differences is important because they can affect the Incoterms you choose with your supplier and help you manage the import clearance process more efficiently. Whether you’re the seller or the buyer, it’s important to know when each party is responsible for shipping costs. This knowledge ensures smoother transactions and gives you better control over logistics and compliance.

Keep reading to learn how these distinctions can impact your business and improve your approach to international trade.

What Is Delivered Duty Paid? DDP Incoterms

Delivered Duty Paid (DDP) is an International Commercial Term (Incoterm) commonly used in global trade to clearly define responsibilities between buyers and sellers. With DDP, the seller takes full responsibility for delivering goods to the agreed destination. This includes handling all risks, costs, and legal requirements, such as transportation, customs clearance, and duty payment, until the goods arrive at the buyer’s specified location.

What Is Delivered at Place? DAP Incoterms

Delivered at Place (DAP) is a shipping agreement in international trade where the seller takes full responsibility for delivering goods to a location chosen by the buyer. The seller covers all transportation costs, manages export customs clearance, and assumes all risks during transit until the goods arrive at the specified destination. However, once the goods reach their destination, the buyer is responsible for unloading them and handling any import duties, taxes, or customs clearance required in their country.

DDP vs DAP

DDP and DAP delivery are Incoterms defining the responsibilities of buyers and sellers in international trade. While they share some similarities, the main difference is who is responsible for customs duties, taxes, and import clearance at the destination country.

Below is a comparison table that outlines the key differences between DDP and DAP:

Aspect	DDP (Delivered Duty Paid)	DAP (Delivered at Place)
Seller’s Responsibility	Full responsibility for transportation, export/import customs, duties, taxes, and delivery.	The seller covers transportation costs and export customs; the buyer handles import customs, duties, and taxes.
Buyer’s Responsibility	Only responsible for receiving the goods at the agreed destination.	Responsible for unloading the goods and handling import duties, taxes, and customs clearance.
Customs and Duties	The seller handles all customs formalities, including payment of import duties and taxes.	The buyer is responsible for paying import duties, and taxes, and handling import customs procedures.
Risk During Transit	Seller assumes all risks during transit and delivery.	The seller assumes risks until the goods arrive at the agreed place; the buyer takes over once the goods arrive.
When to Use	Ideal for sellers who want to offer a complete door-to-door service to the buyer.	Ideal for buyers who are familiar with local import procedures or want to handle their customs clearance.
Cost	Typically higher for the seller due to the added responsibility for import costs.	Generally less expensive for the seller, as the buyer covers the import costs.

Obligations for Buyer and Seller

In international trade, Incoterms defines the responsibilities of buyers and sellers regarding shipping, customs, and risks. DDP and DAP shipping terms specify who handles costs and risks during the shipping process. The following table is a comparison of Delivered Duty Paid vs Delivered at Place, outlining the key differences in responsibilities and obligations for both parties:

Incoterm	Seller’s Responsibilities	Buyer’s Responsibilities
DDP	– Arrange transportation and pay all freight costs.	– Receive goods at the specified location.
	– Handle export and import customs clearance, including payment of all duties, taxes, and fees in the destination country.	– No responsibility for shipping costs or customs fees.
	– Obtain all necessary permits, licenses, insurances, and documentation for both export and import clearance.	– No responsibility for export/import documentation or compliance.
	– Bear all risks and costs related to goods until delivery at the agreed destination.	– No risk during transit; assumes risk only once goods are received.
DAP	– Arrange transportation and cover all freight costs to the destination.	– Receive goods at the agreed destination.
	– Handle export customs clearance, including payment of export duties and fees.	– Unload goods once they arrive at the specified location.
	– Assume all risks during transit until goods are delivered to the agreed destination.	– Assume responsibility for risks once goods are delivered to the specified place.
	– No responsibility for import customs clearance, duties, or taxes.	– Handle import customs clearance, including paying all duties, taxes, and fees for entry into the destination country.
	– Provide necessary export documentation.	– Provide necessary import documentation and handle local import procedures.

Choosing between DDP and DAP

Choosing between DDP and DAP incoterms depends on your business requirements, control over shipping processes, and your willingness to manage duties and taxes. Each term provides distinct advantages depending on who assumes responsibility for various stages of the transaction.

DDP is the best choice if you aim to provide a seamless buyer experience. Under DDP, the seller is responsible for all aspects of transportation, customs clearance, taxes, and fees. This makes it especially attractive to international buyers who prefer not to manage the complexities of customs themselves.
DAP, on the other hand, is ideal if the seller wants to handle the shipment but prefers the buyer to take responsibility for import duties, taxes, and customs clearance at the destination. This option gives the seller more flexibility, allowing them to focus on transportation while the buyer manages the final stages of importation.

Considerations for Choosing Between DDP and DAP

When choosing between Delivered Duty Paid and Delivered at Place Incoterms, evaluating several factors to ensure the shipping term aligns with your business needs is essential. Below are key considerations to help guide your decision-making process:

Cost Implications

DDP shipping tends to be more expensive for the seller because they take on the full responsibility for all shipping-related costs, including transportation, export and import customs clearance, duties, taxes, and any additional fees. This results in a higher overall cost for the seller, who bears all risks involved in the process. In contrast, DAP is less costly for the seller, as they only handle transportation and export clearance. At the same time, the buyer assumes responsibility for import duties, taxes, and customs procedures, reducing the seller’s financial burden but shifting more costs onto the buyer.

Control Over the Process

With DAP, the buyer gains more control over the importation process. They are responsible for customs clearance, paying import duties and taxes, and managing any necessary documentation. This can be advantageous if the buyer has an efficient system in place for handling imports. On the other hand, DDP puts the entire process in the hands of the seller, who manages both the transportation and customs procedures. This provides a more streamlined experience for the buyer but limits their control over the final stages of the shipment.

Delivery Speed

DDP can lead to faster delivery times since the seller manages both the shipping and customs processes. By handling everything from start to finish, the seller can ensure there are fewer delays during customs clearance or transportation. However, DAP may take longer, as the buyer must complete the import customs clearance upon arrival, which may introduce delays depending on the country’s customs procedures. The time it takes to clear customs and pay any necessary duties can affect the overall delivery speed.

Best Practices for Using DDP or DAP in International Trade and Customs Clearance

Companies must adhere to a few key best practices to ensure a smooth and efficient experience with either DDP or DAP shipping methods. These practices help streamline the process and minimize the risk of delays, fines, or issues during customs clearance.

Proper Documentation and Labeling of Goods

Correct and clear documentation is essential for both DDP and DAP shipments. This includes accurate invoices, shipping labels, origin certificates, and other relevant customs paperwork. Inaccurate or incomplete documentation can lead to customs delays, fines, demurrage fees, or even seizure of goods. Ensure that all required documents are in place and properly labeled according to the destination country’s requirements.

Accurate Calculation of All Costs

Whether you choose DDP or DAP, it’s important to calculate all costs involved in the shipment accurately. For DDP, the seller must factor in transportation, customs clearance, duties, and taxes at the destination. For DAP, the seller must be clear about their shipping responsibilities, while the buyer must understand their obligations for customs clearance and duty payment. A thorough breakdown of costs will help avoid unexpected expenses and ensure transparency in the transaction.

Effective Communication Between All Parties

Clear communication between the seller, buyer, and any third-party logistics providers is critical for both DDP and DAP shipments. Keeping all parties informed about the shipment’s status, tracking details, and any customs requirements ensures a smooth process. Timely updates can prevent misunderstandings and allow for quick resolution of any issues that arise during shipping or customs clearance.

Compliance with All Relevant Regulations and Laws

Both DDP and DAP require strict compliance with international trade regulations, customs laws, and import/export rules. Companies must stay up-to-date on any changes in trade agreements, tariffs, and regulations in the countries involved. Non-compliance can result in delays, penalties, or rejection of the shipment, so it’s essential to stay informed and ensure all actions are legally compliant.

What are the Risks Associated with DDP and DAP Incoterms?

When using Delivered Duty Paid and Delivered at Place Incoterms, it’s important to be aware of the following risks:

Miscommunication and Disputes: In both DDP and DAP, unclear communication between the seller and buyer can lead to misunderstandings about responsibilities, potentially resulting in delays, disputes, or additional tariffs
Damage During Transit: Goods can be damaged during transit, and in DDP, the seller assumes responsibility for this risk, including insurance. In DAP, the buyer assumes responsibility for the goods once they arrive at the destination (after customs cleared), which can lead to disputes over liability if damage occurs after delivery.
Non-Payment or Delivery Delays: In DDP, if the buyer fails to take delivery or payment is delayed, the seller may incur financial losses. In DAP, if the buyer delays customs clearance or fails to pay import duties and taxes, the seller’s goods may be held up, leading to delays.
Compliance Risks: DDP requires the seller to ensure trade compliance with customs regulations at the destination country, including incorrect HS Code classification or tariff mismanagement, while DAP places this responsibility on the buyer. Non-compliance with local laws and regulations can lead to fines, delays, or even the rejection of goods.

Simplify International Trade with Egypt IOR

Understanding shipping Incoterms is crucial to enhancing the efficiency of your operations. For example, the difference between DAP and DAT can help you decide who assumes responsibility for import duties, allowing smoother customs processes. Similarly, understanding the distinction between DDP and FOB can save you time and money by clarifying who handles transportation and risk at each stage.

For a hassle-free experience, Egypt IOR provides comprehensive DDP shipping services and acts as your Importer of Record (IOR), ensuring seamless customs clearance and compliance.

Fill out the form today to streamline your shipping and trade processes with Egypt IOR.

Resources

ICC. n.d. “Incoterms® 2010 ” International Chamber of Commerce – ICC: https://iccwbo.org/news-publications/icc-rules-guidelines/incoterms-rules-2010/
Trade Finance Global – “How to Use INCOTERMS® Proficiently: Risk, Responsibility, and Transfer Operations.”: https://www.tradefinanceglobal.com/posts/use-incoterms-risk-responsibility-transfer-operations/
Great.gov.uk – “International Trade Contracts and INCOTERMS.”: https://www.great.gov.uk/advice/prepare-for-export-procedures-and-logistics/international-trade-contracts-and-incoterms/

Frequently Asked Questions

No, DDU (Delivered Duty Unpaid) was removed from the Incoterms 2010 edition. It has been replaced with DAP (Delivered at Place), which outlines a clearer distinction between the responsibilities of the buyer and seller regarding customs clearance and duties.
Yes, DPU (Delivered at Place Unloaded) has replaced DAT (Delivered at Terminal) in the 2020 revision of the Incoterms. Both terms refer to the delivery of goods to a specified location, but DPU applies to any place, not just a terminal, and includes unloading at the destination.
Businesses use DDP to provide a seamless buyer experience by handling all shipping, duties, taxes, and customs clearance. DAP is used when the seller manages the transportation but leaves customs clearance and import duties to the buyer at the destination.
No, DAP does not include customs clearance. The seller is responsible for delivering the goods to the agreed location, but the buyer must handle customs clearance, including paying any import duties and taxes.
The main difference between DAP (Delivered at Place) and DDU (Delivered Duty Unpaid) is that in DAP, the seller delivers goods to a specified location, while the buyer handles customs clearance and pays any import duties and taxes. DDU also requires the seller to deliver goods, but it was less clear who was responsible for customs clearance. Thus, DAP is a more defined and preferred term in the updated Incoterms.