DDP or DAP? What You Really Need to Know Before Shipping Internationally

A Comprehensive Analysis of the International 

Freight Terms DDP and DAP: Definitions, 

Responsibilities, Differences, and a Practical 

Selection Guide

In international freight transport, whether you're a buyer or seller, you'll encounter a range of specialized 

freight terminology. Among them, DDP (Delivered Duty Paid) and DAP (Delivered at Place), established 

by the International Chamber of Commerce (ICC), are the most widely used. These two terms directly 

determine the division of responsibilities, cost sharing, and risk transfer between buyers and sellers. A 

thorough understanding of their core principles is key to avoiding trade disputes and ensuring smooth 

cross-border transactions. This article will begin with basic concepts, breaking down the obligations, 

advantages, and challenges of each. It will also provide practical scenarios and provide recommendations 

for choosing between them. It will also provide an analysis of relevant freight roles to help businesses 

make informed decisions.

一. Basic Understanding: Incoterms—The 

    "Universal Rules" of International Trade

Before understanding DDP and DAP, it's important to first understand the core value of Incoterms. They serve as 

the "language standard" for global cross-border trade, directly impacting transaction efficiency and risk management.

1.1 What is Incoterms?

Incoterms (International Trade Terms) are standardized trade rules developed by the International Commercial 

Cooperation (ICC). The 2020 edition, currently in use, includes 11 terms covering the entire process from 

shipment to delivery. 

Their core functions include:

Unified definitions of responsibilities and obligations:  Eliminate differences in understanding between 

countries regarding concepts like "delivery" and "customs clearance," 

for example, clarifying who is responsible for booking a container or who bears the risk of cargo damage;

Reduce disputes: Preemptively divide costs (freight, duties, customs clearance) and risk points, avoiding 

buck-passing caused by unclear responsibilities and obligations during collaboration;

Improve efficiency: Simplify contract negotiation processes, enabling companies to accurately calculate 

costs and plan logistics, reducing uncertainty in cross-border supply chains.

1.2 The Core Value of Incoterms

For cross-border businesses, Incoterms serve as a "safety net":

New businesses: Leverage standardized rules to quickly get started and avoid pitfalls caused by 

unfamiliarity with overseas policies;

Established businesses: Clarified terminology shortens negotiation time and improves global supply chain 

collaboration efficiency;

Risk control: Clear risk transfer points facilitate pre-arranged insurance and logistics tracking, minimizing 

losses from cargo damage and delays.

二. DDP (Delivered Duty Paid): The Seller's 

    "All-Inclusive"  Responsibility Model

DDP is the terminology that places the highest demands on the seller's responsibility. Its core principle is

"full responsibility for the seller, zero worry for the buyer." The seller bears all costs and risks until the 

buyer signs for the goods.

2.1 Core Definition

The seller assumes full responsibility for the entire process, from packaging the goods to receipt at the 

buyer's designated location. This includes:

- Transportation: Inland transportation (factory to port/airport), international transportation (sea/air), 

   and local delivery in the destination country;

- Procedures: Export declaration and import customs clearance (including document preparation and  

  cooperation with customs inspection);

- Costs: Freight, customs duties, Value Added Tax (VAT), customs clearance agent fees, and storage fees;

- Risks: All losses resulting from loss, damage, or delays (e.g., transportation disasters or customs  

  clearance failures).

The buyer simply accepts delivery at the agreed time and location, without any additional fees or formalities. 

The final total cost is determined when the order is placed.

2.2 List of Obligations of Buyer and Seller

Core Obligations

Seller

1. Assume the risk of damage or loss of goods before receipt

2. Handle the entire export and import customs clearance process and pay customs duties on your behalf

3. Pay all freight charges (including local delivery in the destination country)

4. Synchronize logistics schedules to ensure on-time delivery

Buyer

1. Sign for and inspect the goods (verify quantity and specifications)

2. Assist with unloading (providing a site is optional)

3. Responsible for the storage and use of goods after receipt

2.3 Core Advantages

1. Excellent Buyer Experience: Especially suitable for small and medium-sized buyers (such as cross-border 

e-commerce sellers) who are unfamiliar with the policies of the importing country, eliminating the need to deal 

with complex customs clearance, lowering the purchasing threshold;

2. Transparent Costs: No hidden costs, buyers can manage their budgets, and avoid disputes caused by 

"customs bills after order placement";

3. High Trust: The all-inclusive seller model facilitates long-term partnerships and is particularly suitable for 

first-time cross-border partners;

4. High Efficiency: The seller coordinates logistics and customs clearance, avoiding process disconnects 

caused by multiple parties (such as missing customs clearance documents and poor transportation connections).

2.4 Potential Challenges

- High Pressure on the Seller: The seller must be familiar with the importing country's policies (such as tariff rates 

  and product certification). Without a local agent, goods can be easily detained due to customs clearance errors.

- Difficulty in Controlling Costs: Fluctuations in importing country tariffs and storage fees caused by customs 

  clearance delays can increase seller costs.

- High Qualification Requirements: Some countries (such as the US and the EU) require customs clearance 

  providers to have local tax numbers or IORs (Importer of Record), which sellers must prepare in advance.

三. DAP (Delivered at Place): The "Seller Ships, 

     Buyer Completes" Division of Labor

DAP is a term for "separating transportation and customs clearance." Its core principle is that the seller is 

responsible for delivery to the destination, while the buyer is responsible for customs clearance and tax payment. 

This provides a more flexible division of responsibilities and is suitable for buyers with local resources.

3.1 Core Definitions

The seller is responsible for delivering the goods to the buyer's designated destination (e.g., warehouse, factory), 

and assumes the following responsibilities:

- Transportation: inland transportation, international transportation, or local delivery in the destination 

   country (until the goods reach the destination);

- Formalities: export customs declaration (including document preparation);

- Risks: loss, damage, or delays before the goods arrive at the destination.

Once the goods arrive at the destination, the buyer is responsible for:

- Import customs clearance (procurement and inspection);

- Payment of import duties, value-added tax, and customs clearance fees;

- Unloading, subsequent storage, and use of the goods. The buyer assumes all risks after receipt.

3.2 List of Obligations of Buyer and Seller

Core Obligations

Seller

1. Assume the risk of damage or loss of goods before arrival at the destination.

2. Handle export customs clearance and provide required documents (such as Certificate of Origin).

3. Pay all freight costs (up to the destination).

4. Synchronize transportation schedules to ensure timely delivery.

Buyer

1. Handle import customs clearance and pay duties and fees.

2. Responsible for unloading and assume the risk of damage to goods during unloading.

3. Responsible for storage and use of goods after receipt, and handle subsequent issues (such as 

local distribution).

3.3 Core Advantages

1. Buyer Controls Customs Clearance: Suitable for sophisticated buyers familiar with the importing country's 

policies (such as large manufacturers and local traders). They can independently select customs clearance agents 

and optimize declaration plans (such as using duty-free status to reduce costs).

2. Low Procurement Cost: The seller's quotation does not include duties and fees. Buyers can benefit from a lower 

price by assuming some of this responsibility, offering significant cost advantages for bulk purchases.

3. Low seller risk: No need to intervene in customs clearance in the importing country, avoiding mistakes caused 

by unfamiliarity with local policies (such as special product certification). This is particularly suitable for multi-country 

shipments.

4. Compatibility with special cargo: For goods requiring special customs clearance, such as medical devices and 

chemicals, it is easier for the buyer (local entity) to obtain certification documents, resulting in more efficient 

customs clearance.

3.4 Potential Challenges

- Complex buyer operations: Import qualifications (such as local tax numbers and import licenses) are required. 

  Small buyers with limited resources are prone to incurring demurrage fees due to customs clearance delays.

- Cost uncertainty: Fluctuating tariff rates and additional customs clearance inspection fees may increase 

  the buyer's budget.

- Risk of bridging liability: If the seller fails to provide customs clearance documents in a timely manner or the 

  buyer's customs clearance is delayed, the goods may be detained. Therefore, bridging details must be 

  agreed upon in advance.

四. Comparison of Core Differences 

    between DDP and DAP

五. Practical Choice: How to Choose Between 

     DDP and DAP?

The key to choosing between DDP and DAP is to "match your own resources with your needs." This decision  

should be made based on the buyer's capabilities, the type of goods, and the destination's policies.

5.1 Scenarios When DDP is Preferred

1. Buyers are small or medium-sized enterprises or cross-border e-commerce merchants 

(such as Amazon FBA sellers): They lack local customs clearance resources and require hassle-free service.

2. Destination policies are complex (such as the EU and Japan): Tariffs are high and customs clearance procedures 

are strict. A full-service seller package reduces buyer risk.

3. High-value/fragile goods (such as electronics and luxury goods): They require full control to avoid losses caused 

by transportation and customs clearance errors.

4. First-time cross-border collaboration: Use DDP to build trust and reduce communication costs.

5.2 Scenarios When DAP is Preferred

1. The buyer is an established importer/local enterprise: They have a long-standing customs clearance agency 

and are familiar with local policies (e.g., tariff reductions and exemptions).

2. Bulk purchases/long-term partnerships: By assuming customs clearance responsibilities, they can achieve 

lower prices and reduce overall procurement costs.

3. Goods requiring special customs clearance (e.g., medical devices, dangerous goods): The buyer (a local entity) 

can more easily obtain certification documents, resulting in higher customs clearance efficiency.

4. Destination tariffs fluctuate significantly (e.g., some South American countries): The buyer can conduct 

independent customs clearance to flexibly adapt to tax rate fluctuations and control costs.

5.3 Solutions for Special Situations

- Buyers without import qualifications who want to choose DDP: They can entrust a freight forwarder to provide 

  IOR (Importer of Record) services (e.g., completing customs clearance through a local agent).

- Sellers unfamiliar with customs clearance at the destination: Choose DAP and provide assistance with customs 

  clearance documents to avoid disconnection of responsibilities.

- Shipping from Amazon FBA/overseas warehouses: DDP is preferred to ensure direct delivery of goods to the 

  warehouse, avoiding customs clearance delays that could impact inventory turnover.

六. Analysis of Related Freight Roles: NVOCC, 

     DPD, and Freight Forwarders

In DDP/DAP operations, the following roles are often involved. Understanding their functions can 

improve logistics efficiency:

6.1 NVOCC (Non-Vessel Operating Common Carrier)

- Definition: A freight forwarder (such as a large freight forwarder) that does not own a vessel but can issue 

  bills of lading, book shipping, and consolidate cargo.

- Role: Provides LCL (Less than Container Load) services to reduce shipping costs for small and medium-sized 

  sellers; coordinates with shipping companies to secure shipping space, especially during peak shipping 

  seasons (such as the period before Christmas).

- Suitable Scenarios: Businesses that require flexible cargo consolidation and cost control for LCL 

  shipments under DDP/DAP.

6.2 DPD (European Local Delivery)

- Definition: Europe's leading "last mile" delivery service provider, covering major countries such as Germany, 

  France, and the UK;

- Function: Under the DDP model, DDP provides local delivery in the destination country (e.g., from the port 

  to the buyer's warehouse), with fast delivery times (typically 1-3 days) and traceable shipping routes;

- Suitable scenarios: DDP shipments to the European market, especially cross-border e-commerce B2C 

  orders (e.g., buyers located in Germany or France).

6.3 The Core Value of a Freight Forwarder

Whether choosing DDP or DAP, a high-quality freight forwarder can address key issues:

- Customs Clearance Support: Providing IOR services, assisting with document preparation, and navigating 

  complex destination policies;

- Logistics Integration: Coordinating ocean/air freight, local delivery, and optimizing shipping routes 

  (e.g., a "sea freight + DPD" DDP solution);

- Risk Control: Real-time tracking of shipments, assisting with claims processing in the event of delays or 

  damage, and minimizing losses for both buyers and sellers.

七. Summary: Accurate Selection Ensures 

     Smooth Cross-Border Trade

DDP and DAP are not inherently superior or inferior; the key is to match them to your needs:

- For hassle-free delivery, choose DDP: Suitable for buyers without local resources who prioritize efficiency, 

  or for first-time partners seeking to build trust;

- For cost control and initiative, choose DAP: Suitable for Suitable for clients with local resources, established 

  buyers, or long-term bulk purchases.

Regardless of the terminology chosen, it is recommended that:

1. The contract clearly specifies the "destination address," "risk transfer details," and "cost allocation" to  

avoid ambiguity;

2. Prioritize working with freight forwarders with IOR certification and destination agents to mitigate customs 

clearance risks;

3. Track logistics routes in real time and retain relevant documents (such as bills of lading and customs 

clearance certificates) to facilitate subsequent dispute resolution.

By accurately matching terminology with your own resources, you can significantly reduce the risks and costs 

of cross-border freight transportation and ensure smooth transactions.