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The Difference Between DDP and DAP in Trade Terms

In international trade, choosing the appropriate trade term has an important impact on the allocation of costs and responsibilities between the parties to the transaction. DDP (Delivered Duty Paid) and DAP (Delivered at Place) are common trade terms. Understanding their definitions and differences can help companies make more informed decisions.

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The Difference Between DDP and DAP in Trade Terms

What is DDP?

DDP (Delivered Duty Paid) means delivery after duty paid, which means that the seller bears all costs and risks from the origin to the destination, including transportation costs, insurance costs, import duties and taxes, until the goods arrive at the location designated by the buyer.

Key points of DDP

Seller’s responsibility: The seller is responsible for all transportation links and costs, including transportation to origin, international transportation, transportation to destination, customs clearance fees, duties and taxes.
Transfer of risk: The risk is transferred from the seller to the buyer only after the goods arrive at the buyer’s designated location and are delivered.
Applicable scenarios: Usually applicable when the seller has the ability to handle import procedures and has good logistics and customs declaration resources in the buyer’s country.

Most traders who import electronic products from Shenzhen and traders who import clothing from Guangzhou use DDP China as the delivery method.

This is because, with this technology, they are only responsible for unloading the cargo. The seller must handle everything else. This includes packaging, labelling, local transfers, storage and taxes. European e-commerce news claims that 40% of new Amazon sellers in Europe come from China.

Learn more: The Advantages And Disadvantages Of The DDP Shipping Agreement

What is DAP?

DAP (Delivered at Place) means delivery at destination, which means the seller is responsible for delivering the goods to the location designated by the buyer, but does not include paying import duties and taxes. The buyer is responsible for handling import customs clearance and paying related fees.

Key points of DAP

SELLER RESPONSIBILITY: The seller is responsible for all costs and risks of transportation to the buyer’s designated location, excluding customs clearance and payment of import taxes.
Transfer of risk: Risk passes to the buyer when the goods arrive at the buyer’s designated location but are not unloaded.
Applicable scenario: Applicable when the seller has the ability to arrange international transportation, but the buyer is more familiar with the customs clearance procedures and tax treatment of the destination country.

Differences between DDP VS DAP

Although both DDP and DAP require the seller to bear most of the shipping responsibilities, they have significant differences in import customs clearance and payment of duties.

Import customs clearance:
DDP: The seller is responsible for import customs clearance and pays all related fees.
DAP: The buyer is responsible for import customs clearance and pays all related fees.

Duties and taxes:
DDP: Seller pays import duties and taxes.
DAP: Buyer pays import duties and taxes.

Risk transfer point
DDP: The risk is transferred when the goods are cleared for import and delivered to the buyer’s designated location.
DAP: Risk passes when the goods arrive at the buyer’s designated location but are not unloaded.

Ease of operation
DDP: Easier for the buyer as the seller is responsible for all formalities and the buyer only has to receive the goods.
DAP: The operation is relatively complicated for the buyer, who needs to deal with customs clearance and pay taxes.

Learn more:

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How to choose the appropriate trade term (DDP or DAP)?

Choosing a DDP or DAP depends on the specific needs and capabilities of the buyer and seller:

Advantages for sellers:

DDP: If the seller has good logistics and customs declaration resources in the destination country and can bear the risk of import taxes and fees, DDP is a better choice.
DAP: If the seller is only good at international transportation and the customs clearance procedures in the destination country are complicated, the seller can choose DAP and leave the customs clearance responsibility to the buyer.

Buyer Advantages:

DDP: If the buyer wants to simplify the import process and reduce operating and management costs, choose DDP and let the seller handle all matters.
DAP: If the buyer is familiar with the customs clearance procedures of the destination country and has the ability to handle import taxes and customs clearance matters, DAP is a better choice.

Case analysis

Case 1: Electronic products imported to the United States
An American company importing electronic products from China wanted to simplify the import process and avoid complicated customs clearance procedures. By choosing DDP, the seller has an agent and customs broker in the United States who are responsible for customs clearance and payment of duties, and the buyer only needs to receive the goods.

If you want to know the cost of shipping from China to the USA, you can click on the link:

Case 2: Raw materials imported to Germany
A German company imports raw materials from China, is familiar with the local customs clearance process, and has the ability to handle import taxes and fees. By choosing DAP, the seller is responsible for shipping to Germany, and the buyer handles customs clearance and pays related fees, saving some costs.

If you want to know the cost and time of shipping from China to Germany, you can click on the link:

DDP and DAP are two common trade terms in international trade, each with its own advantages and disadvantages. Choosing the right trade term depends on the specific needs, capabilities and preferences of both parties.
DDP is suitable for buyers who want to streamline the import process, while DAP is suitable for buyers who have the ability to handle customs clearance. By understanding the difference between the two terms, businesses can more effectively manage international logistics and trade risks.

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