Home Mutual Funds Delivered Duty Unpaid (DDU) Definition

Delivered Duty Unpaid (DDU) Definition

by admin



What Is Delivered Duty Unpaid (DDU)?

Delivered Duty Unpaid (DDU) is an old international trade term indicating that the seller is responsible for the safe delivery of goods to a named destination, paying all transportation expenses, and assuming all risks during transport.

Once the goods arrive at the agreed-upon location, the buyer becomes responsible for paying import duties, as well as further transport costs. However, Delivered Duty Paid (DDP) indicates that the seller must cover duties, import clearance, and any taxes.

Key Takeaways

  • Delivered Duty Unpaid (DDU) is an international trade term meaning the seller is responsible for ensuring goods arrive safely to a destination; the buyer is responsible for import duties.
  • By contrast, Delivered Duty Paid (DDP) indicates that the seller must cover duties, import clearance, and any taxes.
  • DDU is still commonly used in transportation contracts, even though the International Chamber of Commerce has officially replaced it with the term Delivered-at-Place (DAP).
  • The primary benefit of delivered duty unpaid (DDU) shipping is that it gives the buyer more control over the shipping procedures.
  • From the seller’s perspective, DDU shipping provides the ability to take more of a “hands-off” approach when it comes to the destination country’s shipping rules.
  • The biggest problem for buyers in DDU shipping is the possibility of surprise duties and/or tax charges when their shipment finally arrives.

Delivery Duty Unpaid (DDU)

Understanding Delivered Duty Unpaid (DDU)

The International Chamber of Commerce (ICC) is an organization that was originally formed after World War I with the goal of fostering prosperity in Europe by setting standards for international trade. It was this group that, in 1936, published a set of standardized terms for different types of shipping agreements, known as Incoterms. [[Citation to International Chamber of Commerce. “Incoterms Rules.” Accessed May 17, 2021.]]

Incoterms are contract specifications outlining who bears the costs and risks of international transactions; they are subject to change at the discretion of the ICC. Because of the legal and logistical intricacies of international shipping, the ICC seeks to simplify matters for businesses by standardizing its terms.

Notably, 2020 Incoterms revision is available for purchase direct from the site.

Delivered Duty Unpaid (DDU) was actually not included in the most recent (2010) edition of the International Chamber of Commerce’s Incoterms; the current official term that best describes the function of DDU is Delivered-at-Place (DAP). [[Citation to International Chamber of Commerce. “Incoterms 2020.” Accessed May 17, 2021.]]

However, DDU is still commonly used in international trade parlance. On paper, the term is followed by the location of delivery; for example, “DDU: Port of Los Angeles.” 

DPU Shipping

Delivered at Place Unloaded (DPU) is the third term used to differentiate between shipping methods. Under DPU, the seller is also responsible for unloading the goods at the place of destination.

Responsibilities Under Delivered Duty Unpaid (DDU)

According to DDU arrangements, the seller secures licenses and takes care of other formalities involved in exporting a good; it is also responsible for all licenses and costs incurred in transit countries, as well as providing an invoice at its own cost.

The seller assumes all risk until the goods are delivered to the specified location, but it has no obligation to obtain insurance on the goods. 

The buyer is responsible for obtaining all necessary licenses for importing the goods and paying all relevant taxes, duties, and inspection costs. All risks involved in this process are borne by the buyer. Once the goods are placed at the disposal of the buyer, all further transportation costs and risks fall on the buyer.

Seller Obligations vs. Seller Obligations Under DDU
Seller Obligations Buyer Obligations
Delivers the goods, as well as the documentation that proves the buyer can take legal possession of them. Pays for the delivered goods.
Responsible for all documentation required to export the goods. Responsible for all documentation required for import clearance once the shipment has arrived.
Once the goods are delivered to the destination country, all risk is transferred to the buyer. Once the goods are delivered alongside the ship, the buyer is responsible for any loss or damage from that point on.
Seller pays for the delivery, loading, labor, and transportation costs up to the destination country. Buyer pays for the import duties and taxes, customs charges, unloading costs, and delivery costs to their own warehouses.

Delivered Duty Unpaid (DDU) vs. Delivered Duty Paid (DDP)

In the world of shipping, delivered duty unpaid (DDU) simply means that it’s the customer’s responsibility to pay for any of the destination country’s customs charges, duties, or taxes. These must all be paid in order for customs to release the shipment after it arrives.

On the other hand, delivered duty paid (DDP) means it’s the shipper’s responsibility to pay any of the customs charges, duties, and/or taxes required to send the product to the destination country.

Advantages and Disadvantages of Delivered Duty Unpaid (DDU)

The primary benefit of delivered duty unpaid (DDU) shipping is that it gives the buyer more control over the shipping procedures. For global buyers looking to keep a consistent flow of inventory, having a higher degree of control over the process can be paramount.

For instance, controlling costs and tracking shipments are typically easier to do under DDU shipping than in DDP shipping. Buyers are naturally more knowledgeable of their own country’s shipping customs.

From the seller’s perspective, DDU shipping provides the ability to take more of a “hands-off” approach when it comes to the destination country’s shipping rules. The seller is simply responsible for getting the cargo to its destination, where the buyer can handle all of the legal complications.

Of course, there are also disadvantages to DDU shipping. The biggest problem for buyers is the possibility of surprise duties or tax charges when their shipment finally arrives. Obviously, that’s a big negative for buyers. But it’s not ideal for shippers, either, because disgruntled customers may refuse to pay for their parcel to be delivered.

DDU Shipping FAQs

Is DDU Shipping or DDP Shipping Better?

As we’ve discussed, there are pros and cons to each method of shipping. So it ultimately boils down to what the buyer or receiver wants out of their shipping experience.

If the receiver prioritizes control of the shipping process and doesn’t mind the legal complications or surprise charges that come with more control, DDU is a good option. But if a buyer wants a streamlined process without the possibility of any surprise charges, DDP is probably the way to go.

Who Is Responsible for DDU Shipments?

Under DDU shipping rules, the seller is fully responsible for the delivery of the goods to the destination country. The seller assumes all risks involved up to unloading.

The buyer bears the risk and cost of the unloading.

Is DAP the Same as DDU?

Delivery-at-place (DAP) was introduced in 2010 to basically replace the term delivery duty unpaid (DDU), so they’re essentially the same.

Source link

Spread the love

related posts