What are DDU and DDP?
DDP: Delivered duty paid at destination
Delivery after duty paid refers to the seller at the designated destination, after handling the import customs clearance procedures, will be delivered to the buyer on the delivery vehicle has not been unloaded goods, complete delivery. The seller must bear all risks and expenses of transporting the goods to the designated destination, including any “taxes” (including the liability and risk of customs formalities, as well as handling charges, duties, duties and other charges) payable at the destination when customs formalities are required.
DDU: Delivered duty unpaid at destination
Duty-unpaid delivery refers to the seller in the designated destination to the disposal of the goods to the buyer, do not deal with import procedures, also do not unload the goods from the delivery of the means of transport, namely complete delivery. The Seller shall bear all risks and expenses for transporting the goods to the named destination, excluding any “taxes” (including the liability and risk of customs formalities, as well as handling charges, duties, duties and other charges) that are payable on imports in the destination country when customs formalities are required. The buyer must bear this “tax” and the costs and risks caused by its failure to timely import customs clearance procedures.
The differences between DDU and DDP are as follows:
The biggest difference between DDU and DDP mainly lies in who bears the risks and costs in the process of import customs clearance at the destination port. DDP is used if the exporter is able to complete the import declaration, the DDU term should be used if the exporter is unable or unwilling to handle the import formalities, risks and expenses.
- Different delivery methods:
DDU is delivered duty unpaid at the destination port, and the goods are delivered to the buyer at the designated destination. DDP refers to delivery after duty paid at the destination port. It means that the seller delivers the goods that have not been unloaded on the delivery vehicle to the buyer after handling the import customs clearance procedures at the designated destination.
- The two import declaration is different:
DDU is for the seller to handle the import declaration and bear the costs before delivery. DDP is for the buyer to handle import declaration, assume the responsibility and risk of customs formalities, and pay handling charges, duties, taxes and other charges.
The precautions of DDP and DUP
Whether import clearance is convenient
Under DDU delivery terms, the seller undertakes the obligation to deliver the goods to the agreed destination in the importing country and actually deliver them to the buyer. But the customs clearance procedures and import duties are not borne by the seller, but by the buyer. This is appropriate for some free-trade areas and for trade between countries with customs unions. However, if the import country is a difficult and time-consuming country for customs clearance, the buyer sometimes cannot complete the customs clearance procedures smoothly in time. In this case, it will be risky to require the seller to undertake the obligation to deliver goods at the destination on time.
Good at handling insurance matters
According to the terms of DDU, the seller has no obligation to conclude insurance contract, because DDU belongs to actual delivery, the risk before delivery is borne by the seller, conclude insurance contract or not, with the buyer is irrelevant. However, due to various risks in international trade, especially in the case of DDU, the seller is responsible for transporting the goods from the exporting country to the final destination in the importing country, which involves many links and long-distance transportation, and the possibility of loss caused by disasters or accidents is very high. Therefore, the seller should transfer the risk by means of insurance.
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