DAP, DPU and DDP are Incoterms® used in international trade. They define the responsibilities of buyers and sellers in international shipping. These terms look similar but have key differences. Understanding the difference between DAP, DPU and DDP is important for smooth and successful transactions for the importer and exporter.
There are currently 11 Incoterms® that are used throughout global trade. DAP, DPU and DDP Incoterms® that are used at the final part of the supply chain, where delivery is made to the named place or destination. These terms state which party (seller or buyer) is responsible for:
- Delivery to destination
- Unloading at destination
- Customs clearance processes, import duties & taxes
In this article we’ll cover them so you can choose which one might work best for you.
DAP (Delivery at Place) Defined
Delivered at Place (DAP) means the seller is responsible for all costs and risks involved in delivering the goods to a named place. The seller takes care of the International and local transportation costs to deliver the shipment to the named place of destination.
Once the goods arrive, the buyer assumes responsibility. The buyer is responsible for unloading fees, import customs clearance processes and paying the applicable import duties & taxes. This term is flexible and can be used for various delivery points, including ports, airports, or the buyer’s premises.
DPU (Delivery at Place Unloaded) Defined
Delivered at Place Unloaded (DPU) means the seller is responsible for all costs and risks involved in delivering the goods to a named place, plus any unloading charges at the named place. The seller takes care of the International and local transportation costs to deliver the shipment, plus the applicable unloading fees at the named place of destination.
Once the goods have been unloaded at the named place, the buyer then assumes responsibility. The buyer is responsible for the applicable import customs clearance procedures, import duties and taxes. This term is flexible and can be used for various delivery points, including ports, airports, or the buyer’s premises.
DDP (Delivery Duty Paid) Defined
Delivered Duty Paid (DDP) means the seller is responsible for all costs and risks involved in delivering and unloading the goods at the named place of destination, including the import customs clearance charges, import duties and taxes at the destination country.
So the seller takes care of the International and local transportation costs to deliver the shipment, the applicable unloading fees at the named place of destination and is also responsible for paying the applicable import custom clearance charges, duties and taxes at the destination country.
The key difference in the DDP Incoterm® is that the buyer does not deal with the customs clearance and does not pay the import duties and taxes.
This term ensures that the seller handles absolutely all of the freight processes and costs to the final destination, making it easier for the buyer.
DAP, DPU and DDP: Understanding the Key Differences
| Responsibility | DAP (Delivered at Place) | DPU (Delivered at Place Unloaded) | DDP (Delivered Duty Paid) |
| Shipping Costs | Seller | Seller | Seller |
| Unloading at Destination | Buyer | Seller | Seller |
| Customs Clearance, Import Duties & Taxes | Buyer | Buyer | Seller |
| Insurance | Negotiable | Negotiable | Negotiable |
Which party is responsible for insurance under DDP and DAP?
Using DAP, DPU and DDP the seller is not obligated to provide insurance for the shipment. The buyer and seller should agree on which party will cover the insurance to protect shipments against loss or damage in transit.
Stating DAP, DPU and DDP Incoterms® on Documentation
To avoid any misunderstanding, buyers and sellers must clearly state the agreed Incoterm® on the relevant sales & purchasing contracts, and export documentation. It is imperative that buyers and sellers check sales contracts to ensure that the Incoterms® edition year is included. If there is no year stated then the following will apply:
- Up to 31st December 2019 – Incoterms® 2010
- From 1st January 2020 – Incoterms® 2020
- If a different year is stated (for example Incoterms® 1990), then the respective terms will apply
The below is the structure that should be used on sales contracts:
- [Incoterm® rule] [Named port of destination/place/point] Incoterms® 2020
- DAP Longbeach, Incoterms® 2020
Which Incoterm® is better, DAP, DPU or DDP?
Choosing between DAP, DPU and DDP depends on various factors, including the nature of the transaction, the buyer’s and seller’s capabilities, and specific logistical considerations.
Factors to Consider When Choosing Between DAP, DPU and DDP
- Control Over Shipping Process:
- DAP and DPU gives the buyer more control over the customs clearance import process.
- DDP allows the seller to manage the entire shipping and customs clearance process.
- Knowledge of Import Procedures:
- Sellers may be unfamiliar with the import regulations of the destination country so usually prefer DAP or DPU.
- DDP is better suited for sellers who are experienced and have resources to handle import procedures.
- Cost Management:
- DAP and DPU will reduce the seller’s costs as the buyer handles the customs clearance and payment of import duties and taxes.
- DDP involves higher costs for the seller, covering all duties and taxes, but provides cost certainty for the buyer.
Conclusion
Choosing between DAP, DPU and DDP depends on the specific needs of the buyer and seller. DAP and DPU is better when the buyer wants control over customs clearance and is prepared to handle import duties and taxes. DAP and DPU also suit sellers that want to avoid the complexities and risks associated with customs clearance in the country of import.
DDP is ideal for buyers who prefer a hassle-free delivery with no hidden costs and for sellers who have the expertise to manage the entire shipping process, including import duties and taxes. This option builds strong buyer relationships by ensuring smooth and straightforward transactions.
FAQ
Why should a seller not use DDP?
Using DDP (Delivered Duty Paid) can be risky and costly for sellers. The seller bears all costs and risks, including import duties, taxes, and customs clearance, which can be complex and unpredictable in a foreign country. If the seller is not familiar with the import regulations of the destination country, it can lead to delays and additional expenses.
Has DPU replaced DAT?
The previous Incoterm® DAT (Delivered at Terminal) is now called DPU (Delivered at Place Unloaded). It was decided to change the term to DPU to remove confusion that arose in the past. In the past, DAT required ‘Delivery at Terminal (unloaded)’, however the word “terminal” caused confusion. The new term DPU (Delivery at Place Unloaded) covers ‘any place, whether covered or not’.
Has DAP replaced DDU?
Yes, DAP replaced DDU in the Incoterms® 2010 update. DAP (Delivered at Place) is now used instead of DDU (Delivered Duty Unpaid). Both terms mean the seller delivers goods to a specified location, but under DAP, the buyer handles import duties and taxes. This change simplifies the terms and makes them clearer for international trade.
Are DAP, DPU and DDP suitable for all types of shipments?
Yes, DAP, DPU and DDP can be used for any mode of transportation. It’s important to note that they may not be suitable for a particular seller and buyer agreement. DAP is ideal for use in multimodal transport.
Resources
Purchase the official Incoterms® 2020 book from the International Chamber of Commerce
