Incoterms Comparison: DDP vs. DAP—What's the Difference?

This video dives into two Incoterms that often get confused: DDP and DAP. If you're an exporter, it's crucial to understand the differences between these terms to make the right decision for your shipments.

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► Incoterms Chart of Responsibilities and Transfer of Risk: https://www.shippingsolutionssoftware...
► An Introduction to Incoterms eBook: https://www.shippingsolutionssoftware...
► Find 100s of articles about various aspects of exporting on Passages: The International Trade Blog: https://www.shippingsolutionssoftware...

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What Is Delivered Duty Paid (DDP)?

Under DDP, the seller takes on the maximum responsibility—covering all risks and costs until the goods are delivered to the named destination, ready for unloading and cleared for import. This means the seller handles everything, from export clearance to paying import duties, taxes and even Value Added Tax, or VAT. The risk only transfers to the buyer when the goods reach the destination.

The seller must be familiar with the import regulations in the buyer's country and deal in a foreign currency, which means they are responsible for currency exchange and the associated risks. Because of this heavy responsibility, exporters often shy away from using DDP and may instead use DAP or DPU, unless they’re very familiar with the destination country’s import regulations.

What is Delivered At Place (DAP)?

With DAP, the seller is still responsible for most of the transport costs and risks, but there's a key difference: the buyer takes over the responsibility for customs clearance and any import duties, taxes, or fees.

DAP is a more flexible option that can be used with various transport methods and destinations, whether it’s a port, airport, seaport or even the buyer’s premises or a border crossing—any named place will work.

Under DAP, the seller is responsible for:
—Export clearance,
—Transporting the goods to the named destination,
—Coordinating with the buyer’s customs broker for export documentation.

But the buyer takes over:
—Customs clearance,
—Import duties, taxes, and fees,
—Unloading the goods, unless specifically stated otherwise.

DDP vs. DAP: Which Should You Use?

So, how should you decide which term to use? As an exporter, the amount of risk you’re taking on when using DDP should make you extremely wary of choosing it. But if you do, consider this adjustment to mitigate the risk that comes with hard-to-estimate taxes:

"DDP (named place of destination) excluding VAT or other taxes."

DDP is even of questionable value to importers. Relying on exporters to navigate the bureaucracy of import clearance could go very wrong. DAP is the preferable choice for most exporters who want to keep control over freight.

To learn more about all Incoterms 2020 rules, download our free guide, An Introduction to Incoterms (https://www.shippingsolutions.com/int..., linked below, along with our Chart of Responsibilities and Transfer or Risk (https://www.shippingsolutions.com/inc..., which is an easy way to compare all 11 terms.

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Chapters
00:00 Introduction
00:45 What Is Delivered Duty Paid (DDP)?
01:43 What is Delivered At Place (DAP)?
02:40 DDP vs. DAP: Which Should You Use?

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