Why avoid DDP?

1, Overview of DDP Trade Terms
DDP trade term, which means delivery after tax payment, means that the seller is responsible for transporting the goods to the designated destination and completing all necessary procedures and expenses for importing the goods before delivery, including customs duties, taxes, freight, and insurance fees. Under DDP terms, the buyer takes delivery of the goods from the carrier at the designated destination without the need for any import procedures. This trade term may seem to provide great convenience for buyers, but in reality, it hides many risks.
2, Risks borne by the seller
High fees and costs: Under DDP terms, the seller is responsible for all transportation costs and risks, including tariffs, taxes, freight, and insurance fees. These costs may be much higher than those under other trade terms, increasing the economic pressure on the seller.
Difficulty in import customs clearance: The seller is responsible for the import customs clearance procedures, including preparing relevant documents and communicating with customs. If the seller is not familiar with the laws, regulations, and customs clearance procedures of the importing country, it may lead to risks such as customs clearance delays, fines, and even confiscation of goods.
Buyer credit risk: Due to the DDP term where the buyer only makes payment after receiving the goods, the seller may face the risk of buyer default or refusal to pay for the goods. This risk is particularly prominent in international trade, as the credit risk in cross-border transactions is relatively high.
3, Possible issues that buyers may face
Relying on the seller: In DDP terms, the buyer hardly needs to participate in the transportation and customs clearance process of the goods, which may lead to excessive dependence on the seller by the buyer. Once the seller encounters problems or breaches the contract, the buyer may face the dilemma of not receiving the goods in a timely manner or being unable to recover the payment.
Information opacity: Due to the DDP term, the seller is responsible for the transportation and customs clearance process of the goods, and the buyer may not have real-time access to the transportation status and related information of the goods. This may result in the buyer being unable to take timely measures when there are problems with the goods, increasing transaction risks.
Potential legal risk: Although the buyer does not need to handle import procedures under the DDP term, the buyer still needs to comply with the laws and regulations of the importing country. If the buyer is not familiar with or has misunderstandings about the laws and regulations of the importing country, it may lead to risks such as legal disputes and fines.
4, Other considerations
Trade flexibility: The DDP term limits the flexibility of trade. Due to the seller's need to bear all transportation costs and risks, they may not be willing to accept certain special transportation requirements or change the delivery location. This may lead to transaction failure or inability to meet the buyer's needs.
Supply chain risk: Under DDP terminology, the seller is responsible for the operation of the entire supply chain, including the production, transportation, and customs clearance of goods. If any link in the supply chain encounters problems, it may lead to risks such as delivery delays or loss of goods. This risk is particularly severe for the seller, as they need to bear all responsibilities and losses.