Last updated on Sep 3, 2024

What are the main differences between CIF, CIP, DAP, and DDP Incoterms for importers?

If you are an importer, you need to understand how Incoterms affect your responsibilities and costs when buying goods from overseas suppliers. Incoterms are international trade terms that define the delivery conditions, risks, and obligations of the seller and the buyer in a contract. In this article, we will compare four common Incoterms for importers: CIF, CIP, DAP, and DDP.

1 CIF: Cost, Insurance, and Freight

CIF means that the seller pays for the cost, insurance, and freight of the goods until they reach the destination port. The seller also clears the goods for export, but not for import. The buyer takes over the risk and responsibility for the goods once they are loaded on the ship, and has to pay for the customs clearance, duties, taxes, and onward transportation in the destination country. CIF is typically used for sea or inland waterway transport.

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Captain Zarir Iràni

Maritime Entrepreneur | Dy Registrar, Antigua & Barbuda Maritime Flag Administration | Ambassador @Baltic Expert Witness Assoc | IIMS-UK Board Member | Investor in Cybersecurity| Founding Member of Maritime Law Asso, UAE
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Incoterms define the roles, costs, and risks for buyers and sellers in shipping. CIF and CIP require the seller to pay for transport and insurance to the destination but differ in the insurance coverage—with CIP providing more comprehensive cover. DAP makes the seller responsible for all charges until the goods are ready for unloading, whereas DDP includes even the import duties and taxes, offering a hassle-free option for buyers. Each term shifts risk from seller to buyer at different points in the journey, affecting control over costs and logistics. Choose the right Incoterm based on your preference for risk management and cost control.

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2 CIP: Carriage and Insurance Paid To

CIP means that the seller pays for the carriage and insurance of the goods until they reach a specified place in the destination country. The seller also clears the goods for export, but not for import. The buyer takes over the risk and responsibility for the goods once they are handed over to the first carrier, and has to pay for the customs clearance, duties, taxes, and onward transportation in the destination country. CIP can be used for any mode of transport, including multimodal.

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3 DAP: Delivered At Place

DAP means that the seller delivers the goods to a specified place in the destination country, ready for unloading by the buyer. The seller bears all the risks and costs of transporting the goods, including export and import clearance, but not the duties, taxes, and other charges in the destination country. The buyer is responsible for paying these charges, as well as unloading and final delivery of the goods. DAP can be used for any mode of transport, including multimodal.

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4 DDP: Delivered Duty Paid

DDP means that the seller delivers the goods to a specified place in the destination country, cleared for import and with all duties, taxes, and other charges paid. The seller bears all the risks and costs of transporting the goods, from the point of origin to the point of delivery. The buyer only has to unload and take delivery of the goods. DDP is the most favorable Incoterm for the buyer, but also the most demanding for the seller. DDP can be used for any mode of transport, including multimodal.

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Tamir Maharaj

Trade Advisor, World Trade Centre Winnipeg International Business & Trade
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Why would a seller choose DDP? Competitive Advantage: Offering DDP can be a powerful differentiator, attracting buyers who seek a hassle-free import experience. Logistics Control: By managing the entire shipping process, sellers can potentially negotiate better rates with logistics providers and have greater control over final costs. Simplified Logistics for Buyers: DDP removes import complexities for buyers, making transactions smoother and potentially leading to faster payment. While it demands significant responsibility and potential risks for the seller, it can be a powerful tool for securing deals, simplifying logistics for buyers, and ultimately fostering smoother international trade.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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International Shipping

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What are the main differences between CIF, CIP, DAP, and DDP Incoterms for importers?

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1 CIF: Cost, Insurance, and Freight

2 CIP: Carriage and Insurance Paid To

3 DAP: Delivered At Place

4 DDP: Delivered Duty Paid

5 Here’s what else to consider

International Shipping

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