What Importers Need to Know About DDP Shipments: Benefits, Risks, and Compliance

Le
1 hour ago
3 min read

In the world of international trade, few terms cause more confusion for U.S. importers than DDP – Delivered Duty Paid. While DDP may appear convenient on the surface, it's important to understand what you're agreeing to — and what risks come with it.

Whether you're an importer receiving goods under DDP terms or a customs broker handling such shipments, knowing your responsibilities and the potential pitfalls can help you avoid compliance issues and unexpected costs.

What Does DDP Mean?

DDP (Delivered Duty Paid) is an Incoterm (International Commercial Term) that means the foreign seller is responsible for nearly everything in the transaction, including:

Export clearance in the origin country
Freight transportation
Import clearance in the U.S.
Payment of all U.S. duties and taxes
Final delivery to the buyer’s location

The U.S. buyer is only responsible for receiving the goods — everything else is handled by the seller or their appointed agent.

Why Importers Choose DDP

For U.S. buyers, DDP can sound attractive because it simplifies logistics:

No need to arrange international freight
No direct dealings with U.S. Customs
No need for a customs bond or customs broker
Duties and taxes are included in the price

It's often used by buyers who are new to importing, want to avoid the administrative burden, or are purchasing small shipments.

But Here’s the Problem…

While DDP seems simple, it creates several compliance and control risks for the U.S. importer — especially when things go wrong.

1. Who Is the Importer of Record?

Even in DDP shipments, U.S. Customs requires a valid Importer of Record (IOR) — and that person must have a financial interest in the goods. In many cases, the foreign seller will use their freight forwarder or agent as the IOR, even though that party may not qualify legally. If the wrong party is listed as IOR, the shipment could be delayed, denied, or audited.

2. Lack of Visibility

Since the seller controls the shipment, the buyer often doesn’t know:

Who filed the customs entry
What HTS code or value was declared
Whether the right duty was paid
Whether goods were properly classified

This lack of transparency could lead to penalties or delays — and the U.S. buyer may not even know until much later.

3. Difficulty Claiming Refunds or Protests

If the shipment is overcharged on duties, entered incorrectly, or becomes subject to a tariff change, the person listed as IOR is the one who can file a refund or protest. If that party is a foreign seller’s agent or unknown forwarder, you may not be able to recover your money.

4. Risk of Non-Compliance

U.S. Customs holds the importer responsible for accurate classification, valuation, and recordkeeping — regardless of who made the entry. So if your name is on the commercial invoice or purchase order, you could be liable, even if the foreign seller made the filing.

Best Practices for DDP Shipments

If you're going to accept shipments under DDP terms, here are a few steps to protect yourself:

Know who the IOR is — Ask for their CBP-assigned number and ensure they are authorized.
Request a copy of the CBP entry (7501) — Even though you're not filing it, you should review it for accuracy.
Keep all documentation — Commercial invoices, bills of lading, payment records, and correspondence.
Use trusted freight forwarders — If the seller is appointing the forwarder, request their U.S. agent contact.
Consider switching to DAP or FCA terms — You gain more control while still letting the seller handle the bulk of transport.

Final Thoughts

DDP shipments may offer short-term convenience, but they can also expose U.S. importers to long-term compliance and financial risks. If you're regularly receiving DDP shipments, work with a licensed U.S. customs broker to review the structure and ensure that your entries are compliant.

*** If you're unsure about your setup, consult a licensed customs broker. At Spirit CHB, Inc., we specialize in helping importers verify and document these transactions correctly so they can focus on growing their business while staying compliant ***