In international trade, freight movement is often complained of as the most costly expense. But one of the reasons for that is that people group all of their logistics fees together. Not just what they pay their freight forwarder, but customs, tax, duties, warehousing. But some of those expenses can be removed if you negotiate the right Incoterms. Understanding the difference between DDP and DAP is the first step towards taking control of your overheads.
Understanding Incoterms 2020 for Sending Freight to Europe
What are Incoterms 2020?
Incoterms 2020 are the internationally recognised rules that lay out the responsibilities of buyers and sellers in international trade. Their role is to clarify who handles transportation, insurance, customs clearance, and, most importantly, who pays for what.
Although there are 11 Incoterms in total, DDP (Delivered Duty Paid) and DAP (Delivered at Place) are widely considered the more important for freight forwarding in Europe. because they determine who is responsible for import customs and duties.
What is DDP?
Delivered Duty Paid (DDP) is where the seller takes on nearly all the risk and cost involved in getting goods to the buyer’s door.
Under DDP, the seller:
- Arranges transportation
- Clears export customs
- Handles import customs in the destination country
- Pays all duties, VAT, and taxes
For the buyer, this is a “hands-off” experience. The shipment arrives with no additional costs. But for the seller, DDP freight in Europe can be complex. European customs regulations vary by country, and that can make the process more complicated if you don’t have local knowledge.
What is DAP?
Delivered at Place (DAP) shifts some responsibility back to the buyer.
Under DAP:
- The seller arranges transportation to the agreed destination
- The seller clears export customs
- The buyer handles import customs clearance
- The buyer pays duties, VAT, and taxes
In this case, the shipment arrives at the destination country, but it cannot be delivered until the buyer completes customs formalities and pays the required charges. DAP is often simpler, but if buyers aren’t overly organised, it can result in delays.
DAP vs DDP: the key differences
The core difference between DAP vs DDP comes down to import responsibility:
Customs clearance (import):
- DDP = Seller
- DAP = Buyer
Duties and VAT:
- DDP = Seller pays
- DAP = Buyer pays
Risk of delays at destination:
- DDP = Lower for buyer
- DAP = Higher if buyer is unprepared
This distinction may seem small, but it can have major financial implications. Misunderstanding these terms can leave you facing unnecessary and unexpected costs.
Why shippers get burned
Many businesses assume that “delivery” includes customs and duties, but that’s not always true. With DAP, shipments can get stuck at the border while buyers scramble to pay unexpected charges or provide missing documentation.
On the other hand, sellers using DDP without proper planning often underestimate costs.
When you’re freight forwarding in Europe, these mistakes can be amplified by:
- Different VAT rules across EU countries
- Strict customs enforcement
- Language and documentation barriers
- Choosing the right option for your shipments
There’s no one-size-fits-all answer when choosing between DDP and DAP. The right choice depends on your operational capabilities and customer expectations.
Choose DDP if:
- You want to offer a seamless customer experience
- You have the infrastructure to manage EU customs and tax compliance
- You want full control over the delivery process
Choose DAP if:
- Your customer has strong local import capabilities
- You want to reduce administrative burden
- You prefer to avoid foreign tax exposure
- How Plexus helps protect your margins
At Plexus, we aim to help shippers get their goods to where they need to be as quickly, simply, and cost-effectively as possible. Part of that, is helping you to navigate Incoterms 2020. So, if in doubt, reach out and let our service team help.
Have a question or need support? Get in touch with Plexus Freight.
