If you’re arranging an international shipment, you’ve probably seen terms like DAP and DDP on freight quotes, purchase orders, or shipping documents. These are Incoterms—international commercial terms that define responsibilities between the seller and buyer during global transport. Choosing the right Incoterm can mean the difference between a smooth delivery and surprise charges, customs delays, or frustrated clients.
In this guide, we’ll explain DAP (Delivered at Place) vs. DDP (Delivered Duty Paid), outline who pays for what, and show why Incoterms are essential for cost control and risk reduction in international logistics. Whether you ship full container loads (FCL), less-than-container loads (LCL), or air freight, understanding these terms protects your margins and your customer experience.
What Are Incoterms and Why Are They Important?
Incoterms (International Commercial Terms) are standardized rules created by the International Chamber of Commerce (ICC). They clarify who is responsible for shipping costs, cargo risk, insurance, customs clearance, and import duties in international trade.
Why Incoterms matter in logistics:
- Avoid hidden costs: Prevent unexpected customs bills or last-mile delivery fees.
- Reduce disputes: Responsibilities are clearly defined before cargo moves.
- Speed up shipping: Freight forwarders and customs brokers know who is managing each step.
- Improve landed cost accuracy: Buyers can forecast total import cost more reliably.
- Support better fulfillment: Crucial for cross-border B2B and eCommerce shipping.
In short, Incoterms are a foundational tool for managing risk and cost in global supply chain management.
What Does DAP Mean in Shipping?
DAP (Delivered at Place) means the seller is responsible for transporting goods to an agreed destination—often the buyer’s warehouse, job site, or named delivery point. The seller covers all shipping costs and risks up to that place, but the buyer handles import customs clearance and import duties/taxes.
Under DAP, the seller pays for:
- Export packaging and loading
- Export customs clearance
- Main international transport (ocean freight, air freight, rail, or trucking)
- Delivery to the named final destination
- Risk of loss/damage until arrival
Under DAP, the buyer pays for:
- Import customs clearance
- Import duties and taxes (VAT/GST, tariffs)
- Costs caused by import delays (storage, demurrage)
- Unloading (unless contract says otherwise)
Easy way to remember DAP:
“Seller delivers to your door, but you pay customs and duties.”
What Does DDP Mean in Shipping?
DDP (Delivered Duty Paid) goes one step further. The seller handles everything, including import customs clearance and payment of duties/taxes, delivering the goods fully cleared to the buyer.
Under DDP, the seller pays for:
- Everything listed under DAP, plus…
- Import customs clearance
- Import duties, tariffs, and taxes
- Customs broker fees
- Risk remains with the seller until final delivery
Under DDP, the buyer pays for:
- Usually nothing beyond receiving the shipment
- Sometimes unloading, depending on agreement
Easy way to remember DDP:
“Seller delivers to your door, cleared through customs, with duties paid.”
DDP is common in door-to-door international shipping and cross-border eCommerce where the buyer wants a predictable landed cost.
DAP vs. DDP: Key Differences
The core difference between these two Incoterms is who handles import clearance and who pays the import charges:
- DAP: The buyer clears import customs and pays duties and taxes.
- DDP: The seller clears import customs and pays duties and taxes.
Side-by-side comparison
DAP (Delivered at Place)
- The seller delivers the goods to the named destination.
- The seller carries the risk and cost up to that point.
- The buyer acts as importer of record.
- The buyer handles customs clearance and pays import duties and taxes.
- Best suited to buyers who have local customs expertise or a preferred broker.
DDP (Delivered Duty Paid)
- The seller delivers the goods to the named destination.
- The seller carries the risk and cost through delivery.
- The seller acts as importer of record when legally allowed.
- The seller completes customs clearance and pays duties and taxes.
- Best suited to buyers who want fully inclusive pricing and minimal administrative effort.
Case Study: FCL Machinery Shipment USA → Australia
A U.S. equipment manufacturer recently shipped a full container load (FCL) of industrial machinery from Houston, Texas to Melbourne, Australia for a mining contractor. The parties initially considered DDP, hoping for a fully inclusive door-to-door delivery. However, after reviewing Australia’s import process and GST structure, they chose DAP Melbourne (buyer’s facility) instead. The seller handled export packing, inland trucking to port, ocean freight, and delivery to the consignee’s site; risk stayed with the seller until the container arrived at the named place. The Australian buyer then cleared customs using their local broker, paid import duties and GST based on HS classification, and arranged unloading. The decision worked well because the buyer had established customs capability in Australia and wanted direct control over valuation and clearance timing. The outcome was predictable transit, no mid-route cost surprises, and a clear division of responsibility that reduced the risk of delays at the Port of Melbourne.
When Should You Use DAP?
DAP is a strong Incoterm when:
- The buyer has a customs broker or import team
Most experienced importers prefer controlling entry and classification. - You want a cleaner freight quote
DAP excludes duty/tax cost, so the upfront shipping price is lower. - The destination country has complex clearance rules
Buyers may want to manage permits, HS codes, or inspection timing directly.
Example: A U.S. manufacturer ships foodstuffs to New Zealand under DAP and the buyer pays GST and duties on arrival.
When Should You Use DDP?
DDP is best when:
- You want “all-inclusive” landed cost pricing
Great for buyers who don’t want customs administration. - You’re shipping cross-border to consumers
DDP avoids unpleasant “pay duties on delivery” surprises. - You want full control of the customer experience
Especially for high-value products where delays hurt revenue.
Example: A brand ships pharmaceuticals to Germany DDP, so the buyer receives the shipment without paying duties at delivery.
Risks and Considerations
Both terms are useful, but the risk sits in different places.
DAP risks
- Buyers may underestimate duties, hurting their cash flow.
- Customs delays can trigger demurrage or storage billed to the buyer.
- Deliveries may stall if the buyer isn’t prepared with paperwork.
DDP risks
- Sellers must be legally able to act as importer of record.
- Duties/GST can be hard to estimate if classification changes.
- Compliance mistakes can become the seller’s liability.
Working with a qualified freight forwarder helps validate which term is safest for your shipment and destination.
Final Takeaway: Choosing the Right Incoterm
Choosing between DAP vs. DDP shipping terms depends on who should control and pay for import clearance:
- Choose DAP if your buyer wants to manage customs and duties.
- Choose DDP if you want a seamless, buyer-friendly delivery with all costs included.
No matter what, it is important to list Incoterms clearly in your quotes and contracts. They are essential to modern international freight shipping, import/export logistics, and accurate landed cost calculations.
If you’re not sure which term fits your lane, cargo, or customer type, we can help you run the numbers and pick the Incoterm that protects your timeline and budget.
Contact us today to learn how our freight forwarding expertise can support your international logistics and elevate your global supply chain.
