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.
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.
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 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).
However, DDU is still commonly used in international trade parlance. On paper, the term is followed by the location of delivery (e.g., "DDU: Port of Los Angeles").DPU Shipping
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 for 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 | |
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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. |