Delivered Duty Paid (DDP)
Learn why DDP may be beneficial for your international shipments.
DDP (Delivery Duty Paid) and DDU (Delivery Duty Unpaid (the default setting) are International Commercial Terms (Incoterms) used in the global trade industry to define who is responsible for the payment of duties and taxes.
DDP
Delivered Duty Paid (DDP) is a method for shipping goods internationally and is often used by businesses wanting to improve the recipient’s experience and provide them with transparency.
International trade is complicated with many regulations and customs protocols that vary by country, making it hard to know what the true landed cost of a package will be. By shipping DDP, the duties, taxes, and clearance fees are billed back to the shipper. However, there are different procedures that businesses can take to cover these costs. Some businesses choose to absorb these fees for their receivers, while others allow the receiver to pre-pay, collecting the full amount at checkout.
When to Use DDP
DDP works best for B2C shipments as it creates a better customer experience by handling duties and taxes upfront, either covered by the business or collected at purchase. This transparency builds customer trust and encourages repeat business.
Collecting landed cost at checkout
With DDP shipping, merchants can collect all duties, taxes, and fees from customers during checkout instead of absorbing these costs themselves.
By pre-calculating and collecting all fees upfront, customers see the total cost immediately and avoid surprise bills later. This also speeds up customs clearance since all fees are pre-paid.
Key benefits:
- Improved customer experience: Full cost transparency increases checkout confidence and reduces returns
- Clear total costs: All duties, taxes, and fees are included upfront
- Faster delivery: Pre-paid customs fees enable quicker clearance (because custom fees have already been paid) and smooth delivery
DDU
With Delivered Duty Unpaid (DDU), also known as Delivered at Place (DAP), the receiver (your customer) pays all duties, taxes, and clearance fees. The carrier pays these fees at customs and collects them from the recipient upon delivery.
If surprised by these fees, recipients may reject parcels. This forces either a costly return shipment or package abandonment, though some countries require returns. Either outcome is expensive for shippers.
When DDU shipping is recommended
DDU works best for B2B shipments where the receiving business can reclaim or refund duties and taxes, typically during corporate-tax filing. A clear payment trail is required.