Delivery Duty Paid (DDP)
In exporting, the seller enters into an agreement with the buyer to deliver the goods to the buyer's location overseas. Such agreements will specify the terms and conditions under which business will be conducted, especially those that will incur costs associated with the export of goods.
A very important point of the agreement is who will be responsible for paying duties and taxes at the port of destination.
A sale or purchase agreement is called Delivery Duty Paid (DDP) when it is agreed between the exporter and the importer that the former will pay all duties at the port of destination.
Seller's responsibility
In the DDP Shipping Agreement, the seller's responsibility to ensure successful delivery is:
- Verify that all risks of loss or damage to the goods are financially covered up to the point of delivery.
- Handle the export process at the point of shipment, complying with all required protocols, such as providing licenses and documentation as required for specific shipments.
- To bear any costs of customs clearance at the place of delivery. If the product is taxed due to value fluctuation (VAT), the seller will also pay any additional tax.
- Check that products and shipments arrive at international locations for proper termination of liability.
- Take financial responsibility for shipping costs from the packing area to the point of delivery.
- Organize and establish carrier connections with all shipping companies that assist in the delivery of goods.
Delivery Duty Unpaid (DDU)
The ICC stopped using the incoterm DDU in 2010, but it is still widely used. The ICC has officially replaced it with the Incoterm® rules DAP, which is delivered on site, but with the same trade rules as DDU.
DDU means that the buyer is responsible for paying any customs fees, duties or taxes in the country of destination. All these fees must be paid by customs to release the goods after the goods arrive at the pre-agreed location, such as the on-site delivery at Jebel Ali port. The seller is liable until the agreed point of delivery, at which stage the buyer is liable.
Seller's responsibility
DDU shipping and DDP shipping are very similar, but the biggest difference between the two is that the seller does not bear the economic responsibility after the goods arrive abroad. Some of the main responsibilities of the seller in DDU shipping services are:
- Takes responsibility for providing permits, permits and documents required for delivery to Buyer's pickup location.
- Ship the buyer's goods to the country of delivery.
- All financial responsibility is assumed for any damage, theft or loss that occurs in the shipment prior to its arrival at the delivery destination.
- Make sure that the buyer's goods arrive at the designated shipping location.
- Pay shipping for any shipping charges related to labor and loading costs. This can also include purchasing insurance for the goods.
- Provide buyers with the latest information on successful deliveries.
This type of agreement between buyer and seller is called Delivery Duty Unpaid (DDU). The International Chamber of Commerce has replaced Incoterm DDU with DAP (Delivered On Site) in its latest publication "Incoterms® 2020".
How to calculate DDU and DDP fees:
Fob amount. Plus: 1. All local charges at the export port 2. Sea freight (whether positive or negative) is the amount of cif. If you want ddu: plus the local charge at the destination port If you want ddp: plus the destination customs duties in port
Delivery on Place (DAP) and Delivery on Ground (DPU)
In the ICC's latest publication "Incoterms® 2020", the term DAP (Delivered On Site) has replaced DDU. Another important term that has been replaced is DAT (delivered at the terminal). DAT is replaced by DPU (Delivered at Place Unloaded), and the designated unloading location can be anywhere, not limited to the terminal.
DAP and DPU are two Incoterms® similar to DDU. DAP stands for Delivered at Place and DPU stands for Delivered at Place Unloaded. Under DAP, the buyer is responsible for paying duties and taxes and unloading.
The seller arranges the transportation and delivery of the goods to a pre-agreed location, ready for unloading. DAP can be used for any transport protocol.
In a DPU, the seller is responsible for delivery and unloading at the locations specified in the agreement between him and the buyer.
