What Is DDP vs DAP? Incoterms Comparison

Quick Answer

DAP (Delivered at Place) and DDP (Delivered Duty Paid) are Incoterms 2020 delivery terms where the seller bears most of the transport cost and risk. The key difference: under DAP, the buyer pays import duties and customs clearance; under DDP, the seller pays everything including import duties. DDP represents the maximum obligation for the seller and the minimum obligation for the buyer.

Side-by-Side Comparison

Aspect	DAP	DDP
Full name	Delivered at Place	Delivered Duty Paid
Risk transfer	At destination, before unloading	At destination, before unloading
Seller pays freight	Yes	Yes
Seller pays insurance	Not required (but bears risk)	Not required (but bears risk)
Seller pays import duties	No	Yes
Seller handles import customs	No	Yes
Buyer unloads	Yes	Yes
Transport mode	Any (sea, air, road, rail, multimodal)	Any
Seller obligation level	High	Maximum

Cost Breakdown Example

A shipment of ASTM A182 F316L forged flanges from Italy to a project site in Saudi Arabia:

Cost Element	DAP Jubail	DDP Jubail
Manufacturing cost	Seller	Seller
Export customs clearance	Seller	Seller
Inland transport (origin)	Seller	Seller
Sea freight	Seller	Seller
Marine insurance	Seller (bears risk, should insure)	Seller (bears risk, should insure)
Destination port handling	Seller	Seller
Import customs clearance	Buyer	Seller
Import duties and VAT	Buyer	Seller
Inland transport (destination)	Seller (to named place)	Seller (to named place)
Unloading at destination	Buyer	Buyer

Price Element	DAP (USD)	DDP (USD)
Unit price per flange	285	320
Quantity (200 flanges)	57,000	64,000
Import duty (5% of CIF value)	2,850 (buyer pays)	Included
Customs broker fees	500 (buyer pays)	Included
Total cost to buyer	60,350	64,000

The $3,650 difference reflects the seller’s margin on customs and duties. In this example, the buyer saves money under DAP—but only if they have customs clearance capability at the destination.

When to Use DAP

DAP is the more common Incoterm for project site deliveries in EPC:

Scenario	Why DAP Works
Buyer has local customs broker	Buyer handles import clearance more efficiently
Free trade zone or duty exemption	Buyer has project-specific duty exemptions that the seller cannot access
Local tax implications	Buyer wants to control the import declaration for VAT recovery
Multiple vendors, same destination	Buyer consolidates customs clearance for all shipments

When to Use DDP

Scenario	Why DDP Works
Buyer has no local presence	No entity to act as importer of record
Small or one-off purchases	Not worth setting up customs clearance infrastructure
Seller has local subsidiary	Seller can clear customs through own entity
Turnkey supply contracts	Single-price delivery simplifies budgeting

Common Mistake

Assuming the seller can always act as importer of record under DDP. In many countries (Saudi Arabia, UAE, Qatar, Nigeria), only a locally registered entity can clear customs. A foreign seller without a local branch may be unable to fulfill DDP obligations, causing the shipment to sit at the port. Always verify the seller’s import capability before agreeing to DDP terms.

DAP and DDP vs Other Incoterms

Incoterm	Seller Transport	Seller Insurance	Seller Import Duty	Risk Transfer
FOB	To vessel only	No	No	Origin port
CIF	To destination port	Yes (minimum)	No	Origin port
DAP	To destination place	No (but bears risk)	No	Destination
DDP	To destination place	No (but bears risk)	Yes	Destination

For the complete Incoterms 2020 reference and required shipping documents under each delivery term, see the detailed guides. Always specify the full Incoterm and named place (e.g., “DAP Jubail Industrial City” or “DDP Ras Laffan Site Warehouse”) in procurement documents.

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