First, translate the three letters into responsibilities
A seller says “DDP”; a carrier offers a “tax-paid line”; another quote says “DDU”. These labels can describe different contracts. Incoterms® are ICC trade rules used in a sale contract, not the United Nations sales convention (CISG) and not a complete transport or insurance contract. Before comparing prices, identify the seller, buyer, delivery address and the agreement that the label belongs to.
DDU is a legacy term; DAP is the current comparison
DDU appeared in Incoterms® 2000. It is not one of the eleven Incoterms® 2020 rules; DAP is commonly used today for delivery where the buyer handles import clearance and import taxes. An older version can still be expressly incorporated into a contract, so do not silently replace DDU in an existing agreement. Ask what the quotation means and write the chosen rule, precise destination and version together.
The key difference: import clearance and import taxes
Under DDP, the seller is responsible for applicable import clearance, duties and taxes, as well as transport to the agreed destination. Under DAP, the buyer handles and pays for import clearance, duties and taxes; the seller arranges transport to the agreed destination. Neither label removes customs checks, product restrictions or the need for accurate documents. With DDP, confirm how the seller can lawfully complete import formalities in that country.
Risk and unloading: the destination matters
For both DDP and DAP, the normal delivery and risk-transfer point is the named destination, with goods on the arriving vehicle ready for unloading. DDP additionally requires import clearance. The buyer normally unloads. If unloading is included in the seller’s carriage contract, its cost treatment needs attention; do not equate payment of unloading costs with the delivery obligation. Buyer failures to provide required assistance or notices can also affect risk and additional costs.
DDP does not automatically include cargo insurance
Neither DDP nor DAP requires a party to buy cargo insurance for the other under the Incoterms® rule itself. Risk allocation and insurance cover are separate questions. If cover is needed, agree who buys it, the insured value, covered risks, deductible and claims contact. A carrier’s liability limit is also different from a cargo insurance policy.
Compare the whole delivery, not just the headline quote
Request a written breakdown for the same shipment and destination: freight, applicable import taxes, clearance or brokerage charges, final delivery and any access or unloading charges. Then check what triggers storage, inspection or address-correction charges. Do not assume a “tax-inclusive” shipping product covers every possible charge, or that a DAP quote already includes the buyer’s import bill. The quote and contract should explain the scope.
Choose a workable arrangement
DDP may simplify the buyer’s payment planning, while DAP may suit a buyer that already manages imports. Neither is automatically the best option. Verify who can act as importer, what registrations and documents are needed, and whether the destination address can receive the shipment. A useful written instruction specifies the rule and edition, delivery point, import responsibilities, insurance decision and exceptions. Confirm changes before dispatch rather than after customs raises a question.
Reference material
- ICC · Incoterms® 2020 overview
- ICC · DAP and DDP rules (delivery, clearance, insurance)
- ICC France · Incoterms® 2010 and the change from DDU
- ICC · Incoterms® 2020 checklist
General education, not a quotation or legal opinion. The agreed contract and destination requirements govern. Incoterms® is a registered trademark of ICC.
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