When dealing with the movement of freight internationally, it is essential to have a thorough understanding of delivery and shipment procedures in order to have a successful transportation. Learn about the differences betweenDelivery Duty Paid and Delivered Duty Unpaid to help understand these processes and which one might be best for your business.
Delivered Duty Paid (DDP)
Delivery Duty Paid, or DDP, is a an agreement defined by the ICC’s shipping jurisdiction. The ICC clearly defines many terms and agreements made between businesses in different countries to ensure all parties are clear about the agreement being made and all the terms that agreement comes with.
When a customer places an order that needs to be delivered internationally, there are several procedures required to get that cargo to its final destination, including but not limited to packaging, customs clearance and warehousing. Each of these procedures costs the shipper time and money. In a DDP agreement, the seller is responsible for the financial burden of these services from the origin to the time the customer receives the cargo. Sometimes, the seller will account for this but increasing the price of the product at the time of the sale but even if they don’t, often times, it is still worth the cost for the seller.
Seller Responsibilities in DDP
The seller has a clear list of responsibilities in a DDP agreement including:
- Covering the costs of potential risks such as loss or damage up to the final delivery
- Handling the exporting process at the shipping location, including all necessary documents needed for international shipping
- Customs clearance of the cargo, covering all costs associated with this procedure
- Ensure the goods arrive safely to the country of the goods’ destination
- Cover all costs associated with the transport from the place of origin to the destination
- Organize and streamline communication with all other carriers who will be assisting in the transport
Advantages of DDP
There are several advantages to choosing this agreement type including the ease that comes with the seller handling all costs, minimizing risk by having one party responsible for and organizing the transport, and the obvious benefit for the buyer who does not need to worry about any logistics. DDP is the most appealing option for many buyers and even many sellers who work well in this system.
Delivered Duty Unpaid (DDU)
Delivered Duty Unpaid, or DDU, is the alternative option to DDP. In this agreement, the seller is only responsible for the cargo to arrive at the country of destination, rather than the cargo’s final destination. This means it is the responsibility of the buyer to account for the cost of customs charges, transportation fees and the logistics of getting the cargo to its final destination.
Seller Responsibilities in DDU
Though DDP and DDU are similar, the responsibilities of the seller in a DDU agreement differ and are crucial to understand when making a decision on which agreement type is right for you. The seller responsibilities in DDU are:
- Assuming financial responsibility for any risk (loss or damages)
- Provide all documentation needed for the shipment
- Delivery of cargo to the country of destination
- Financial responsibility of the transportation process from the cargo’s place of origin to the country of destination
- Hand over all necessary documents and information needed to finish the delivery once the seller’s part of the transport is complete
Advantages of DDU
DDU requires less of a financial burden on the seller than DDP and allows the buyer to have more autonomy and control over the delivery process, allowing for the buyer to choose from several options that might be more cost effective than DDP. DDU also allows for betting tracking throughout the shipment process, giving you updates every step along the way while DDP does not.
Which Method is Right for Me?
Ultimately, the choice between DDP and DDU is up to you and should be made based off which method works best for your needs. Working with a trusted logistics partner can help you make the right choice for your business. If you are looking for a logistics manager, our team at LogiWorld is ready to help! Contact us today to ask additional questions you may have about DDP and DDU or to get a quote on your next shipment.