ICC Expected to Eliminate DDP Incoterm With 2020 Revisions

The International Chamber of Commerce is preparing to eliminate the Delivered Duty Paid (DDP) rule in its September publishing of revised incoterms, requiring e-commerce traders to update contracts with third-party providers, according to a recent report from PircewaterhouseCoopers. Incoterms (international commercial terms) are internationally recognized trade terms used in global trade contracts.

The ICC is expected to replace the DDP incoterm with two new incoterms, the report said: Delivered at Terminal Paid (DTP) and Delivered at Place Paid (DPP). While DDP helped tell customers the amount in duties they needed to pay and avoid customs delays, it placed too big of a burden on the seller, the report said. Sellers would often have to apply for “import approvals and licenses” and “comply with legislation in countries where it may have no presence.”

The two new incoterms, expected to be released by in September and take effect Jan. 1, 2020, will need to be updated in contracts that e-commerce operators have with third-party providers to “clearly define where their risk passes and responsibility ends,” the report said. While “no major changes are anticipated,” PWC said the change could have the most impact on e-commerce operators that “rely almost entirely, sometimes even blindly, on the services of a third party,” which could lead to “inefficiencies in their supply chain, hidden unnecessary costs, and unknown legal liabilities.”