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Delivered Duty Paid (DDP)

See Also:
Freight on Board (FOB)
Ex Works (EXW)
Delivery Order
Delivered Duty Unpaid (DDU)
Cost of Goods Sold (COGS)

Delivered Duty Paid (DDP) Definition

Delivered Duty Paid or DDP means that a seller or vendor has assumed all of the liability as well as the costs associated with transportation internationally.

Delivered Duty Paid (DDP) Meaning

DPP means that a vendor has agreed to a contract with an overseas or international partner to assume all of the liability and transportation costs. In addition, the concept of delivered duties paid is almost the exact same as freight on board or Ex Works. When a DDP agreement has been met, the buyer will not assume any transportation costs or liability until the goods have been delivered to the country. Delivery within the country is the buyer or customer’s responsibility unless otherwise specified in the delivered duty paid contract. Furthermore, such terms are often worked out in a delivered duties paid contract. Finally, most of the transportation costs associated with a DDP transaction are import/export tariffs along with normal operational cost of a truck or container ship.

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Ex Works (EXW)

See Also:
Freight on Board (FOB)
Transfer Risk
How to manage inventory
Accounting Principles
Accounting Concepts

Ex Works (EXW) Definition

Ex works is an agreement between a buyer and a seller that the seller assumes no responsibility for the cost or liability for a product after it is produced and has left the seller’s warehouse.

Ex Works (EXW) Meaning

Ex works is the same as Freight on Board (FOB) Shipping. The two terms can be used interchangeably because they assume the same terms and agreement between the buyer and seller. The advantage of ex-works from a seller’s standpoint is that the seller is allowed to recognize revenue once the product has been picked up or a contract has been signed. If a contract has been signed then a seller could potentially recognize revenue as the product finishes going through the manufacturing process. On the other side ex works means that a buyer has a potential for loss for the transportation part of the purchase.

Ex Works (EXW) Example

Wawadoo Inc. is a company that specializes in the production of widgets. Wawadoo was recently able to sign ex works shipping terms with another company named, Wanna Widget Inc. Due to these terms, Wawadoo can save on the transportation cost associated with the charge focus solely on production. This becomes beneficial to both companies because Wanna Widget has a well established transportation network and is able to transport the products at a lower cost. Therefore, Wawadoo can drop the price of its widgets to Wanna Widget. Wanna Widget can lower its expense and sell widgets for lower because they can buy the product at a lower price and transport it for cheaper than Wawadoo could.

ex works

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