LDP vs DDP: Key Differences in Shipping Terms Explained
Publish Time: 2025-08-08 Origin: Site
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)
Cost Control: Buyers lock in total landed costs upfront.
Risk Reduction: Sellers absorb shipment delays/duty fluctuations.
Textile Trade: Circumvents China-US quota restrictions via ASEAN transshipment.
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
Customs Compliance
Verify third-country documentation (e.g., Malaysia’s COO certificates)
Pre-clear US FDA/CPSC requirements for regulated goods
Transit Timing
Buffer +15 days for transshipment hubs
Monitor US West Coast port congestion (avg. 8-day delays in Q3 2024)
Document Accuracy
AMS/ISF filings must match commercial invoices exactly
Branded goods require pre-submitted trademark authorizations
Contingency Planning
Budget for 3-5% unexpected costs (customs exams, detention fees)
Secure marine insurance covering transshipment risks
Partner Vetting
5-year US customs compliance record
Bonded warehouse access at destination ports
Require forwarders to provide:
Risk Analysis: LDP vs DDP
Risk Factor | LDP Exposure | DDP Exposure |
|---|---|---|
Customs Seizure | Medium (port level) | High (final delivery) |
Duty Calculation | Seller’s responsibility | Seller’s responsibility |
Last-Mile Delivery | Buyer’s risk | Seller’s risk |
Payment Default | High (pre-delivery) | Extreme (post-delivery) |
Mitigation Strategies:
Use LC payments for first-time buyers
Purchase Coface/Sinosure trade credit insurance
Contractually cap duty payment liabilities
Emerging Best Practices
Hybrid Solutions:
DDP for EU shipments (predictable VAT regimes)
LDP for US/Canada (flexible inland routing)
Tech Integration:
Blockchain tracking for transshipment visibility
AI-powered duty calculators (e.g., CustomsNow)
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.