DAP vs. DDP – Understanding the Difference in International Shipping

Did you know that, according to the International Chamber of Commerce, over 90% of global trade relies on the use of Incoterms® to avoid costly misunderstandings and ensure smooth cross-border transactions? For businesses involved in international shipping, mastering the nuances of Delivered At Place (DAP) and Delivered Duty Paid (DDP) is essential for controlling costs, managing risk, and building long-term customer relationships. In this post, we break down the differences between DAP and DDP, outline the benefits of each, and offer insights for successful global trade.

What Are DAP and DDP?

DAP (Delivered At Place) and DDP (Delivered Duty Paid) are two common Incoterms® 2020 that define the responsibilities of buyers and sellers for international shipments:

• DAP: The seller delivers goods to an agreed destination, covering all transport costs — but the buyer is responsible for import duties, taxes, and customs clearance.

• DDP: The seller takes on maximum responsibility, covering both transportation and all customs duties/taxes — so the buyer receives the goods cleared for import with no additional steps.

Key Differences: DAP vs. DDP

• Customs Duties & Taxes:
  DAP: Buyer pays import duties/taxes.
  DDP: Seller pays import duties/taxes.

• Risk Transfer:
  For both terms, risk transfers when the goods are made available to the buyer at the agreed destination, but DDP extends the seller’s obligations further.

• Complexity:
  DAP is less complex for sellers but can be more involved for buyers, while DDP is more demanding for sellers but delivers a frictionless experience for buyers.

Benefits of DAP

• Greater Control for Buyers: Buyers manage their own customs processes and can often secure better local rates for clearance and taxes.

• Simplified Responsibilities for Sellers: Sellers avoid the risks and uncertainties of foreign customs processes and tax laws.

• Transparency: Import fees and duties are paid directly by the buyer, often reducing pricing disputes and ensuring clear invoicing.

Benefits of DDP

• Ultimate Convenience for Buyers: Buyers avoid customs clearance, duties, and paperwork, making DDP attractive for those new to international trade.

• Competitive Advantage for Sellers: Offering DDP can attract more customers by providing a seamless “landed cost” experience — a major benefit when 41% of international buyers abandon purchases due to unexpected fees (Baymard Institute).

• Faster Deliveries: With all logistics and customs handled, goods clear more quickly, reducing lead times and improving the customer experience.

Choosing the Right Term for Your Business

The choice between DAP and DDP depends on your business model, target markets, and logistics capabilities:

• DAP works best for buyers with established customs expertise or in markets with complex import regulations.

• DDP simplifies the buying process, removes barriers to purchase, and is especially valuable in consumer-facing e-commerce.

With cross-border e-commerce projected to grow at a CAGR of 15.5% through 2027 (Research and Markets), refining your Incoterms® strategy now positions your business for future growth.

Why ShipSquared Is Your Preferred 3PL for DAP or DDP Shipments

Navigating international shipping doesn’t have to be complicated. ShipSquared specializes in global logistics, helping you:

• Offer both DAP and DDP options to your customers

• Simplify customs processing and compliance across major markets

• Streamline your supply chain with advanced technology and reliable 3PL support

Ready to make international shipping seamless for your business and your customers? Get started with ShipSquared today and partner with a 3PL committed to your success. For more cost-saving strategies, read our guide on 7 ways to cut fulfillment costs.