Gross Margin after Freight Duty and Payment Terms
Landed gross margin incorporates freight, tariffs, and handling into unit stock costs, while payment terms dictate the working capital required to carry transit inventory.
Incoterms DDP
Meaning
Standardized commercial trade terms define maximum seller liability by assigning all transportation costs, export clearance duties and domestic import taxes to the vendor. Global supply chain contracts specify incoterms ddp to transfer risk to the buyer only after delivered goods arrive cleared of customs at the named destination. The clause governs international freight transport, customs import clearance, border tax payments and final site delivery.
It stops applying once cargo arrives at the designated facility ready for offloading.
Delivery Obligation
Sellers under maximum obligation terms manage the entire freight movement process from factory floor to destination facility. Under incoterms ddp, foreign suppliers must arrange import licenses, pay regional customs tariffs and coordinate final inland trucking. Unexpected port demurrage charges fall entirely on the seller during transit delays.
Verifying vendor local import capabilities prevents severe clearance stalls at destination ports.
Risk Transfer
Risk shifts to the buyer only when cargo is made available for unloading at the buyer premises.
Term Boundary
Destination delivery terms mandate that suppliers bear total delivery costs, yet unloading responsibility rests with the receiving facility unless agreed otherwise in writing. Procurement contracts using incoterms ddp cover transit insurance, export fees and import taxes without obligating the seller to perform factory installation or equipment setup. Operational handoffs end once physical transport vehicles arrive safely at the receiving bay.