Certified Supply Chain Professional (CSCP) Practice Exam

Which term indicates that the seller takes all costs including duties?

1. Cost, Insurance, and Freight

2. Delivered Duty Paid

3. Cost and Freight

4. Free Alongside Ship

The correct answer is: Delivered Duty Paid

The term "Delivered Duty Paid" (DDP) signifies that the seller is responsible for all costs associated with transporting goods to the buyer's location, which includes not only the freight charges but also duties, taxes, and any other charges necessary to deliver the goods. This means that the seller bears the financial responsibility and risk for bringing the goods all the way to the receiver's door, making it the most comprehensive shipping term in terms of seller obligations. In international trade, DDP is often favored by buyers because it eliminates uncertainty regarding additional costs that may arise once the goods reach the destination. The seller must ensure that all the duties and logistics are handled beforehand, thus providing a clear, predefined cost structure for the buyer. Other shipping terms, such as those referring to costs like "Cost, Insurance, and Freight," "Cost and Freight," or "Free Alongside Ship," do not impose the same level of obligation on the seller with regard to duties or total responsibility for delivery to the buyer's location. In these cases, the seller's responsibilities end at various other points in the supply chain, which can leave the buyer vulnerable to unexpected costs upon receipt of the goods.