LDP vs DDP: Key Differences in Shipping Terms Explained

While both LDP (Landed Duty Paid) and DDP (Delivered Duty Paid) involve the seller covering costs up to the destination port, their operational and risk profiles differ significantly. This guide clarifies these critical Incoterms® to help traders make informed decisions in international shipping.

Core Concepts: LDP vs DDP

DDP (Delivered Duty Paid)

• Definition: Seller handles all transportation, import clearance, and duty payments until goods reach the buyer’s specified location.

• Seller’s Responsibilities:

• Arranges export/import licenses

• Pays origin/destination customs duties

• Manages transit risks (marine cargo insurance recommended)

• Best For: Sellers with strong logistics networks in the buyer’s country.

LDP (Landed Duty Paid)

• Definition: Seller delivers goods to the destination port after paying import duties, but buyer handles final unloading/local delivery.

• Key Differences from DDP:

• Buyer arranges last-mile transport

• Lower seller liability post-customs clearance

• Commonly used for US textile imports via third-country transshipment

• Best For: Bulk commodity trades where buyers control inland logistics.

Why US Buyers Prefer LDP (2024 Trends)

1. Cost Control: Buyers lock in total landed costs upfront.

2. Risk Reduction: Sellers absorb shipment delays/duty fluctuations.

3. Textile Trade: Circumvents China-US quota restrictions via ASEAN transshipment.

4. Efficiency: Single-point accountability simplifies supply chains.

Case Example:

A Guangzhou apparel exporter uses LDP to ship via Malaysia, declaring ASEAN origin to avoid 25% US tariffs on Chinese textiles. Total transit time: 35 days (vs 18 days direct).

Critical Considerations for LDP Operations

5 Operational Must-Knows

1. Customs Compliance

• Verify third-country documentation (e.g., Malaysia’s COO certificates)

• Pre-clear US FDA/CPSC requirements for regulated goods

2. Transit Timing

• Buffer +15 days for transshipment hubs

• Monitor US West Coast port congestion (avg. 8-day delays in Q3 2024)

3. Document Accuracy

• AMS/ISF filings must match commercial invoices exactly

• Branded goods require pre-submitted trademark authorizations

4. Contingency Planning

• Budget for 3-5% unexpected costs (customs exams, detention fees)

• Secure marine insurance covering transshipment risks

5. Partner Vetting

• 5-year US customs compliance record

• Bonded warehouse access at destination ports

• Require forwarders to provide:

Risk Analysis: LDP vs DDP

Mitigation Strategies:

• Use LC payments for first-time buyers

• Purchase Coface/Sinosure trade credit insurance

• Contractually cap duty payment liabilities

Emerging Best Practices

1. Hybrid Solutions:

• DDP for EU shipments (predictable VAT regimes)

• LDP for US/Canada (flexible inland routing)

2. Tech Integration:

• Blockchain tracking for transshipment visibility

• AI-powered duty calculators (e.g., CustomsNow)

3. Regulatory Updates:

• 2024 US Customs’ forced labor audits impact 28% of LDP textile shipments

• New ASEAN-US textile rules effective Q1 2025

Conclusion: Choosing the Right Term

• For Sellers: DDP offers premium pricing opportunities but requires deep import market knowledge.

• For Buyers: LDP provides cost certainty but demands reliable logistics partners.

Pro Tip: Always specify "DDP excluding VAT" or "LDP excluding local trucking" to prevent disputes.