DDP vs DAP: the one difference that changes your landed cost

What the two rules share

Most of DAP and DDP is identical. In both, the seller must arrange and pay transportation of the goods from their origin to the agreed destination^[1], and carries the risk of loss or damage to the goods during transit, from their origin to the agreed point of delivery^[1], which for an overseas order is often your warehouse. In both, the seller must complete and pay for export customs formalities^[1], and in both, you are left with the unloading of the goods from the final mode of transport^[1].

The one difference: import clearance

Under DAP, the goods reach your country at the seller's risk and then stop at customs until you, or a broker you hire, file the entry and pay the duty. An ICC Academy guide to the rules adds a point buyers miss: during that clearance the buyer bears all risks of loss or damage during the import clearance process^[1]. A shipment held for an exam is held at your risk, not the seller's.

Under DDP the seller does all of it and the goods arrive cleared. That is why a DDP price is the closest thing to a landed cost on a quote.

Why a DDP quote into the US is harder than it looks

DDP puts the import in the seller's name, and not every country lets a foreign seller do that. The same guide notes that some customs authorities require the local importer (here, buyer) to carry out the import clearance themselves^[1], in which case DDP cannot be used.

The United States allows it with conditions. A company incorporated outside the US may not enter goods unless it has a resident agent in the State where the port of entry is located who is authorized to accept service of process^[2]. Once it is the importer, the duty is its debt, and paying a broker to handle it does not relieve the importer of liability if the duties are not paid by the broker^[3]. A factory that quotes DDP to a US address is either taking on that liability itself or relying on a third party to act as importer. Ask who the importer of record will be before you accept a DDP price, because that party owes the duty and files the entry for your goods.

How the duty is counted in each

On a DAP quote, you pay the duty on the customs value of the goods. In the US that value is based on a price exclusive of any charges, costs, or expenses incurred for transportation, insurance, and related services incident to the international shipment^[4], and it also leaves out the transportation of the merchandise after its importation^[5] when that is shown separately, so a DAP invoice should list both freight legs as their own lines. On a DDP quote, the duty is inside the price, so the price is not the customs value. US transaction value excludes the customs duties and other Federal taxes currently payable on the imported merchandise^[5], provided they are identified separately from the price. If a DDP invoice does not break them out, the importer can end up paying duty on the duty.

Example: the same order quoted both ways

DAP and DDP to a US warehouse

Line	DAP quote	DDP quote
Price for 2,000 units, delivered to your warehouse	$9,600	$10,950
Freight and insurance inside the price	$1,150	$1,150
Duty inside the price	none	$845
Value for US duty	$8,450	on the seller's entry
Duty you pay at 10% (assumed)	$845	$0
Customs entry, fees and broker you pay	$230	$0
Landed cost	$10,675	$10,950
Landed cost per unit	$5.34	$5.48

Here the DDP route lands $275 higher. The DDP price carries $505 more than the DAP price plus duty: $230 covers the entry costs you would otherwise pay yourself, and the other $275 is the seller's charge for acting as importer. Whether that is worth paying depends on how much you value not dealing with customs, and on whether the seller's importer arrangement is one you trust with your goods.

Illustrative figures, not a quote. Real prices depend on the spec, quantity and factory.

Which one to ask for

• You have a customs broker, or will hire one: ask for DAP. You control the entry, the classification and the duty, and you see every cost.
• Your first import, and the seller has a proven importer arrangement for the US: DDP can be worth its premium, as long as the invoice shows the duty and freight as separate lines.
• Either way: compare quotes on landed cost per unit at your door. Ask every quote to name its rule and place, then add what each one leaves out, so the comparison is like for like.