DDP and DAP (formerly DDU) are widely used in global trade, yet many still struggle to understand their real differences. This article breaks down both terms, explains how they differ in import duties & shipping prices, and gives practical advice on when to use each.
1. What is DDP meaning in shipping?
DDP incoterms (Delivered Duty Paid) is one of the most commonly used shipping terms. It means that the seller directly sends goods to your appointed destination, such as your home, your company, your warehouse, etc. When you receive the goods, the seller has already handled all relevant importing procedures for you.
Since your seller is responsible for the entire shipping process to your warehouse, he should pay all the costs, ensure the safety of transportation, and bear all the risks of loss and damage of goods during the process until the goods are delivered to you.
While all you need to do is wait for your goods at your warehouse and actively assist your seller so that he can obtain the import license or other official documents required and deal with import customs clearance for you.
2. What does DAP mean in shipping? Why did it replace DDU?
Incoterms DAP stands for āDelivered at Place.ā It replaced DDU (Delivered Duty Unpaid) in 2010, which was traditionally used for door-to-door delivery ā where the seller handled everything except import clearance and duties.
Note: DDU is now obsolete and no longer appears in official customs declarations, logistics documents, or trade contracts, although you may still occasionally hear the term in informal communication.
The main goal of introducing DAP was to create a broader and more flexible rule that covers all scenarios of DDU, DAF, and DES. Wherever these three terms were applicable, DAP can also be used.
Simply put, DAP is not limited to a specific destination ā it can refer to a delivery point at a border crossing, on a ship at the destination port, or even at an inland location in the importing country.
3. What is the difference between DDP and DAP?
- Under DDP, sellers handle import customs clearance and pay customs duties.
- Under DAP, buyers are responsible for import clearance and duty payment.
A real example of DDP and DAP
You buy 2000 cups from Yiwu, China, and will send them to your warehouse in New York by sea.
Under the DDP delivery term, your seller will deal with all the things for you, including:
- Arrange trucks to send your goods from the factory to Port of Ningbo (the nearest port to Yiwu).
- Handle export customs declaration, including random customs inspections.
- Arrange shipping from Port of Ningbo to Port of New York.
- Handle import customs clearance and pay all import duties and taxes.
- Send your goods from Port of New York to your warehouse.
While under the DAP term, the seller will first ship your goods to Port of New York. After you go through customs clearance, they will help you send the cargo to your warehouse. So you have to:
- Buy customs bonds
- Declare to the customs
- Prepare and submit customs declaration documents (B/L, Commercial Invoice, Packing List, Arrival Notice, etc.)
- Pay import duties and taxes when receiving goods
4. How to calculate DDP and DAP prices?
We have mentioned above that the seller pays all the fees from his warehouse to your destination. He will contact the freight forwarder, arrange transportation, pay various fees during this period, and deliver the goods to your door. But actually, he will include all these costs in the quote he gives you.
For example, in the example above, you will buy 2,000 cups and ship them from Yiwu to your warehouse in New York. Under DDP terms, your seller will usually tell you the unit price of the product, such as $5 per piece, and the shipping freight from Yiwu to your warehouse, such as $20,000. This $20,000 specifically includes a lot of expenses during transportation, such as:
- Cost from the factory to Port of Ningbo
- Export Customs Declaration fees
- Sea freight from Port of Ningbo to Port of New York
- Import Customs Clearance fees
- Customs Duties/VAT
- Costs from Port of New York to your warehouse
- Other fees
So, the DDP price you get from your seller is:
DDP price = $5/piece * 2000 pieces +$20,000 = $30,000
Some sellers will spread this $20,000 shipping fee to each product, and then quote you a unit price of $15, that is ($5/piece * 2000piece + $20,000) / 2000 piece
If import duties and taxes in this example are totally $3300, then:
DAPĀ price = DDP price – import duties & taxes = $30,000 – $3300 = $26,700
The fees involved in DDP and DAPĀ prices are very complicated. Generally, just like the example above, the seller will not tell you the cost of each importation and shipping process. If you want to know the specific fee details, then you can ask your seller.
5. When to use DDP and DAP in shipping?
International shipping is complicated. For example, when shipping from China, the process usually involves sending goods from the sellerās warehouse to a Chinese port, clearing export customs, shipping to your countryās port, clearing import customs, paying duties, and finally delivering them to your warehouse.
If youāre new to importing or want to avoid shipping hassles, door-to-door delivery is the best option. Choose DDP if the seller can handle import clearance and pay taxes. If not, go with DAP, where you handle those parts yourself.
DAP is also a good choice when import tariffs are high but your budget is limited. If you prefer not to pay duties upfront and want to keep your cash for other needs, DAP lets you settle the duties only after the goods arrive.
However, if customs clearance in your country is difficult or time-consuming, DAP is not recommended. You may face delays or extra costs if you cannot complete the clearance process smoothly and on time.
When deciding which shipping term to use, always calculate the total cost from the sellerās warehouse to your hands. If youāre also comparing terms like CIF, remember that CIF only covers costs up to your destination port. You still need to handle port fees, import duties, and local delivery yourself, so the final costs can add up.
For the most accurate estimate, ask your seller, freight forwarder, or sourcing agent to help you work outall the costs.
6. Truck or courier ā which is better from port to door?
DDP and DAP are both door-to-door shipping. In most cases, your seller will ship the goods to your country by sea, air, or rail, and then arrange the final delivery to your door by truck or express.
For example:
- Sea freight from China to the USA + truck for local delivery usually takes 30ā40 days, with a cost of $1.2ā$1.8/kg.
- Sea freight from China to the USA + express for local delivery usually takes 20ā30 days, with a cost of $2ā$3/kg.
As you can see, if both are first shipped by sea, delivery by truck is cheaper but takes longer than delivery by express.
Whether you choose truck or express depends on your cargo volume, time requirement, and budget. As a guideline, if your shipment is under 2 CBM, the volume is too small for truck delivery, so sea/air/rail + express is usually more suitable. For larger shipments, sea/air/rail + truck becomes a more cost-effective option.
Therefore, if you are an e-commerce sellerāespecially an Amazon FBA sellerāsea/air/rail + express is usually more suitable, as your shipments are often small and require faster delivery.
For example, you can send a small shipment from China to a U.S. Amazon warehouse by sea freight plus express. Itās faster than traditional sea freight and cheaper than direct express shipping.
The freight forwarder in China will consolidate goods from different buyers into one container and ship them to a warehouse in Los Angeles. Then, their partner courier in Los Angeles will deliver each buyerās goods to the final destination ā including your Amazon warehouse. This allows even small shipments of 50ā100 kg to be delivered directly to your door at a reasonable cost.
The end
Hope this post makes DDP and DAP easier to understand. If you have any questions, just leave a comment below ā weāll be glad to help.
As a leading sourcing company in China, JingSourcing specializes in helping you buy and customize various products at competitive prices. We also assist with product inspection and shipping to your destination. Just feel free to CONTACT US whenever you need support for importing from China.
Leave A Comment