Why is DDP so expensive?

Firstly, the high cost of DDP is closely related to the payment of import taxes and fees. In international trade, import tax is a fee that must be paid when importing goods, and its amount depends on the type, value, and tax rate policy of the importing country. For sellers under the DDP term, they need to bear this cost and include it in the total cost of the goods. In some cases, import taxes and fees may account for a significant proportion of the total value of goods, leading to a significant increase in transaction costs under the DDP term.
Secondly, the complexity and cost of handling import customs clearance procedures are also important reasons for the high cost of DDP. Different countries have different import policies and procedures, and some countries may require strict licensing, inspection, and certification procedures. Under DDP terminology, the seller needs to be familiar with and comply with these regulations to ensure that the goods can be imported smoothly. This may require the seller to invest a significant amount of time and resources, including hiring professional customs clearance agents, preparing relevant documents and materials, communicating and coordinating with customs and other government departments, etc. These additional costs and time inputs make DDP more expensive compared to other trade terms.
In addition, the high cost of DDP is also related to transportation methods and logistics costs. Under the DDP term, the seller is responsible for transporting the goods to the designated destination and bears all risks and costs during transportation. This means that the seller needs to choose a suitable transportation method and ensure the safety and timely arrival of the goods during transportation. To achieve this goal, the seller may need to choose faster and more reliable transportation methods, such as air freight or express delivery, which often leads to increased transportation costs. At the same time, the seller also needs to consider the insurance costs, storage costs, and possible additional expenses during transportation, such as customs late fees. These logistics costs are also an important component of the total transaction cost under DDP terminology.
In addition to the aforementioned factors, the high cost of DDP may also be influenced by factors such as market supply and demand, exchange rate fluctuations, and trade policies. When market demand is strong, the price of goods may rise, leading to an increase in transaction costs under the DDP term. Meanwhile, fluctuations in exchange rates may also have an impact on the cost of DDP, as the seller may need to bear the losses or additional expenses caused by currency exchange. In addition, changes in trade policies may also have an impact on the cost of DDP, such as adjustments to tariff rates and the implementation of import restrictions.
In summary, the reason why DDP is so expensive is mainly due to the combined effects of various factors such as the payment of import taxes and fees, the complexity and cost of handling import customs clearance procedures, transportation methods and logistics costs, market supply and demand relationships, exchange rate fluctuations, and trade policies. When choosing to use DDP terminology, both buyers and sellers should fully understand the costs and factors behind it, and conduct comprehensive weighing and consideration. At the same time, in order to reduce the cost of DDP, both parties can optimize transportation methods, improve customs clearance efficiency, and reasonably avoid taxes and fees to reduce transaction costs and achieve more economical and efficient international trade cooperation.