Incoterms: DDP versus DAP

A clear understanding of your Incoterms makes it possible to project shipping costs and establish your pricing more accurately. Incoterms are a set of internationally recognized rules established in 1936 that have been updated over the years. 

They specify whether the buyer or seller is responsible for insurance, documentation, the shipment, and other logistical specifics. 

We talked about Carriage and Insurance Paid (CIP) and Cost Insurance and Freight (CIF) before, but here we’ll review Delivered Duty Paid (DDP) and Delivered At Place (DAP). You’ll learn what each is and why you might opt for one over the other.

What is DAP?

The delivery agreement DAP pins a lot of the responsibilities on the seller. They pay all costs, including those incurred if something were to happen to the sold goods on the way to the buyer’s specified location. 

As a seller, if you are exporting products from the U.S., you may choose DAP over DDP. The obligations of the buyer with DAP terms are to pay any import duties and taxes. It makes the shipping process less risky as the seller because it eliminates surprise tax or duty bills. 

What is DDP?

The seller assumes all responsibility until the buyer receives the goods with DDP terms. That includes shipping costs, insurance, export duties, import duties, and other expenses incurred during transport. 

Using DDP as a buyer means less stress about any purchased goods before they arrive at the indicated location. It’s also usually the least cost-laden choice since their sole responsibility is unloading. 

Partner with Customodal for All of Your Transportation Needs

With a better grasp of DDP and DAP, you should now see the pros and cons of each of these Incoterms. Customodal can help you decide which are best for your shipments to cut costs. Contact us online or call us at 800-445-6577 to start working with a shipping partner who can expertly guide you and ensure you are making the best logistical decisions.