Choosing the wrong Incoterm is one of the most expensive mistakes a business can make in international shipping — and most companies make it without realizing it until the invoice arrives.
DAP (Delivered at Place) and DDP (Delivered Duty Paid) are two Incoterms 2020 rules that define who pays freight, who handles customs clearance, who covers import duties and VAT, and when risk transfers from seller to buyer. The difference between them is a single question: who handles import duties and customs clearance at the destination?
That question has major financial consequences for both sides of the transaction. Here is what you actually need to know.
What Incoterms Are and Why They Matter
Incoterms are standardized international trade rules published by the International Chamber of Commerce. When referenced in a sales contract, Incoterms become legally binding and determine which party is responsible for freight, customs clearance, import duties, and delivery risk. The current version, Incoterms 2020, remains in effect until the next scheduled revision in 2030.
Most international shipment disputes — surprise fees, delayed deliveries, refused goods — trace back to Incoterms that were either misunderstood or never clearly agreed upon. Getting this right before the shipment moves is far cheaper than resolving it after something goes wrong.
DAP: Delivered at Place
Under DAP, the seller delivers goods to a named destination, covering all transportation costs and risks up to that point — but not for unloading. The buyer is responsible for unloading and handling customs clearance, duties, and taxes at import.
Here is what that means in practice:
The seller pays for: export packaging and documentation, export customs clearance in the country of origin, and all transportation costs to the named destination.
The buyer pays for: import customs clearance in the destination country, all import duties, VAT, and local fees, unloading at the destination, and any storage fees if goods are held at customs.
The challenge with DAP is that if the recipient is not already on file with customs authorities, there can be a lack of communication leading to customs delays. Customs will not release a shipment until they have confirmed the billing information of the recipient is on file.
DAP works well when the buyer is an experienced importer with established customs broker relationships in the destination country. When the buyer is not, customs holds and unexpected fees can quickly become the seller’s problem — even if the contract says otherwise.
DDP: Delivered Duty Paid
DDP represents the seller’s maximum obligation. With DDP, the seller covers all transportation costs, export and import clearance, and customs duties and taxes. The seller’s responsibility only ends when the goods are available to the buyer at the destination, ready for unloading.
The seller pays for: everything — export documentation, transportation, import customs clearance, all duties, taxes, and VAT in the destination country.
The buyer pays for: unloading at the destination only.
For buyers, DDP shipping can provide a sense of security and reduce the risk of unexpected fees or delays. When the buyer knows that the seller is fully responsible for the delivery of their order, they may be more inclined to complete a transaction and feel more confident in their decision.
The risk for sellers is real, however. The primary risk for sellers who use DDP is the complexity of import clearance procedures. Finding reliable customs brokers in destination countries can be difficult, and sellers may not have a good understanding of import duties. Sellers who use DDP without fully understanding the import costs at the destination often discover their margins disappear into duties they did not anticipate.
The One Decision That Changes Everything
The main difference between DAP and DDP is who pays import duties and manages customs clearance. Under DAP, the buyer is responsible for import duties, VAT, and customs processing once goods arrive. Under DDP, the seller assumes those responsibilities and delivers goods duty-paid to the named destination.
That single difference determines everything downstream — who carries risk if a shipment is held at customs, who absorbs unexpected tariff changes, and who the customer blames when goods are delayed.
How to Choose Between Them
Choose DAP when: the buyer is an experienced importer with a customs broker in the destination country, you want to control shipping without taking on import liability, and the buyer explicitly accepts responsibility for import costs.
Choose DDP when: you are selling to consumers or less experienced importers who expect an all-in price, you have strong customs knowledge and broker relationships in the destination country, and customer experience and delivery certainty matter more than keeping import risk off your books.
Some import customs authorities impose legal restrictions or regulations that require the local importer — the buyer — to carry out import clearance themselves. In those cases, DDP may not even be legally available as an option regardless of what the contract says. Always verify destination country requirements before selecting an Incoterm.
One More Incoterm Worth Knowing: DPU
If you want the seller to go one step further than DAP — actually unloading the goods at the destination rather than simply making them available for unloading — DPU (Delivered at Place Unloaded) is the right term. The buyer still handles import clearance and duties under DPU, but the seller takes on the unloading responsibility that DAP leaves to the buyer.
How Jansson LLC Helps U.S. Businesses Navigate International Shipping
Understanding Incoterms is only part of the equation. Executing cross-border shipments correctly — with the right documentation, the right carrier, and the right customs coordination — is where the theory becomes operational reality.
Jansson LLC is a Landstar freight agent with access to a nationwide carrier network — including experienced cross-border operators who move freight across U.S.-Mexico and U.S.-Canada corridors and understand the documentation requirements, customs coordination, and carrier handoffs that keep international shipments compliant and on schedule.
Contact Jansson LLC today. Let’s make sure your next cross-border shipment is structured correctly before the surprise fees show up.
