What went wrong?
DDP into a country where the seller can't be importer
A Shenzhen lighting maker quotes 'all-in' DDP to a São Paulo retailer. The containers reach Santos — and nobody can clear them.
Reviewed by: pending — expert review by TermVisa's editor (retired VP, international transport) in progress · Last updated
The deal
DDP São Paulo Incoterms® 2020
- Seller
- LED-lighting maker, Shenzhen, China
- Buyer
- Retail chain, São Paulo, Brazil
- Transport
- Sea — two 40-foot containers, Shenzhen (Yantian) → Santos
The seller, Lumenwave (fictional), a maker of LED fixtures in Shenzhen, China, wants to win a first order from the buyer, a retail chain in São Paulo, Brazil. To make life easy for the buyer, it quotes 'all-in' under DDP São Paulo Incoterms® 2020, building an estimate of Brazilian duties and taxes into the price. Two containers sail from Yantian (Shenzhen) to Santos.
What happened
When the containers arrive, the seller's forwarder delivers the bad news: under Brazilian rules a foreign exporter cannot clear goods into Brazil. Only the Brazilian importer — or a company established in Brazil acting for it — can file the import and pay the duties and taxes.
The buyer refuses at first to act as importer: the price was supposed to include everything. While the parties argue, the containers sit at the terminal, piling up storage charges and the shipping line's container demurrage.
After three weeks the buyer agrees to import through a Brazilian import-service company. The seller credits it with the duties and taxes it had priced in, plus storage, demurrage and the service company's fee. The first order ends at a loss.
Why it went wrong
- DDP only works where the seller can legally be importer of record. Nobody checked the destination's rules before quoting.
- The seller priced in import taxes it had no way to pay — and could not have recovered as a non-resident.
- The contract had no fallback saying who would clear if the seller could not.
✓ Lesson learned
Before quoting DDP, confirm that the seller can be importer of record in the destination country. Where it cannot, offer a delivered term where the buyer clears imports — such as DAP — and price the duties and taxes out.
- Check TermVisa's DDP page and the destination's country notes, then confirm with a local customs broker.
- For Brazil, note too that cargo insurance placed abroad may not be accepted for CIF/CIP — another reason to agree DAP or CPT and let the buyer insure locally.
- Agree free time and who pays storage and demurrage if clearance is delayed.