DDU Shipping: The Complete Guide

DDU, means Delivery Duty Unpaid, whether your supplier is in Shanghai, Shenzhen, Guangzhou or any other place in China, you can just wait for your goods at home, but only one thing you need to take care, you need to pay the duty and VAT ( if your country has the VAT, normally USA has no VAT).

Note: If you use DDU shipping terms, You MUST use your OWN freight forwarder, because your goods are in your own hand. But normally your supplier will not let you use your own forwarder if you are under DDU shipping,  you’d better use EXW or FOB shipping terms.

If you have your goods and want to ship to your home or warehouse, Bansar can help you save a lot of cost, just tell us your details by below form

If you want to  learn more about DDU shipping, keep reading.

Keep reading:

What is DDU (delivery duty unpaid)?

DDU is commonly known as “Delivery Duty Unpaid” and has a considerable impact on the responsibilities of the seller.

For you the buyer, this shipping contract bears very minimal responsibilities.

Now, DDU shipping contracts define that a seller delivers goods to the buyer’s designated destination.

DDU

From this point onwards, the buyer becomes responsible for costs including transportation to final destination and insurance.

Everything prior is the seller’s responsibility except import processes.

Here, the buyer must bear the “taxes and fees” and the costs and risks caused by the failure to timely import and export goods.

This can, however, be negotiated so that the seller also goes through import formalities.

The negotiation can also include the seller bearing the costs and risk incurred, as well as the fees that should be paid when the goods are imported.

Note that whatever you agree upon should be stated clearly in the sales contract.

Important note:

The incoterm DDU applies to all modes of transport.

Nonetheless, when the goods are delivered on board or at the destination port, the term DES or DEQ should be used.

NYK Line

Also, the DDU is a part of the initial set of incoterms known as Incoterms 2000.

In 2010, however, the international chamber of commerce made some changes to these terms.

Here, among others, the term DDU was tweaked to include the named destination place.

So currently, the official term that replaces DDU shipping is DAP “delivered at the place.”

In the contract, the term DAP is followed by the designated destination, i.e., DAP: Port of Memphis, Tennessee.

DAP

With that understanding, let’s now look at the specific obligations of the seller in DDU shipping.

Seller Obligations in DDU Shipping

As I said, DDU shipping has a huge impact on the responsibilities of the seller.

These are:

1. Provide goods as agreed in the contract

The seller must provide goods and commercial invoices or its equivalent in soft copy as per the terms of the contact.

He/she should also provide any other documents that the contract may require to ascertain the goods compliance with the contract.

2. Licenses and permits

The seller must bear the risks and expenses of obtaining the right licenses and other export documents.

He/she must also handle all customs formalities required for the export of goods and transit through countries where customs formalities are necessary.

3. Transportation

The seller must bear all the risks and costs of transporting the goods from origin country to the designated destination.

If the buyer has not given a named place, the seller is free to choose a suitable destination to which he/she will deliver the goods.

4. Delivery of goods

The seller must deliver the goods to the buyer or other person designated by the buyer at the chosen location on the agreed date.

Note that the seller still bears all the risks of delivery.

5. Risk transfer

Unless stated otherwise, the seller must bear risks of loss or damage to the goods up to the designated delivery point.

6. Cost division

The seller must bear all costs incurred in the delivery of goods at the agreed place and time, and the customs expenses before delivery at the designated location.

7. Notify the buyer

The seller must sufficiently notify the buyer of the shipment.

He/she must also inform the buyer of any other information relevant to the delivery of the goods.

8. Proof of delivery and transport documents

At his/her own expense, the seller must provide the buyer with a bill of lading and the required shipping documents.

And, any other relevant documents that are necessary for the receipt of the goods upon delivery.

These other documents include;

• Negotiable bills of lading
• Non-negotiable sea waybills
• Air waybills
• Railway bills
• Road orders

Please note:

If both parties agree that the documents be provided electronically, then all of the above shall be substituted with respective EDIs.

EDIs (electronic data interchanges) are equally suitable for use in this case.

9. Check, package, mark

The seller must bear all costs for checking the quality and quantity of the goods as they should meet the terms of the sales contract.

At his/her own expense, the seller must also provide the right packaging for goods.

Note however that some goods can be delivered without packaging, based on industry practices.

If this is the case, then the seller can forfeit this obligation.

Other obligations

• The seller can assist the buyer to obtain any necessary orders for import clearance at the destination country.
• At his/her own expense and risk, the seller must obtain and provide the buyer with all the relevant shipping documentation.
• In the case of insurance, the seller must provide all documentation required to obtain the insurance coverage.
• Or, transmit the same electronically if the buyer is okay with it.

Well, that’s it about the seller obligations in DDU shipping.

What of the buyer’s?

Let’s find out.

The Buyer’s Obligation in DDU Shipping

While DDU shipping doesn’t put much responsibility on the buyer, the little he/she has to do is crucial to the shipping process.

Incoterms 2010

So here is what the buyer has to do:

1. Pay for goods

The buyer has to pay the agreed DDU price of goods as stipulated in the contract.

2. Licenses and permits

The buyer, at his own risk and expenses, has to obtain any import licenses and any other permits required for customs clearance.

He/she shall also take care of all customs procedures necessary at the importing country.

3. Receive goods

Once the seller delivers the goods at the agreed location, the buyer must receive them.

He/she can receive the goods personally or nominate someone else to do.

The latter must be stated in the contract.

4. Risk transfer

After goods have been delivered at the designated location, the buyer must assume all risks of damage or loss of the goods.

Note that it is the responsibility of the buyer to notify the seller on a suitable place and time of goods delivery.

Failure to do so will result in the buyer assuming all risks and responsibility of shipping from the date of agreed delivery or the expiration delivery period.

Also, if the buyer doesn’t obtain the necessary documentation, he/she shall bear the consequences that come with it.

5. Cost division

The buyer must pay for all costs accrued from the time goods are delivered to the named place of destination.

He/she shall also bear all the cost of customs clearances at the importing country as well as other charges related to the shipment from the time of delivery.

6. Notify the seller

The buyer has the first right of determining the suitable time and place of delivery of goods.

This is because DDU obliges the buyer to sufficiently notify the seller about this within the agreed time limit.

7. Proof of delivery and transport documents

The buyer must receive all the shipping documents that the seller provides as long as they comply with the sales contract.

And, if it’s agreed that electronic transmission is used to supply the documents then the buyer to be ready to receive them.

8. Goods inspection

In case of any pre-shipment inspections that the buyer organizes, he/she must pay all costs.

The buyer is however under no obligation to bear any costs associated with inspections mandated by authorities in the exporting country.

Other obligations

Just like the seller, the buyer in a DDU contract must pay all costs incurred in obtaining importation documents.

He/she must also reimburse the seller of the costs incurred by the seller for assistance in obtaining the documents above.

Issues to be Aware of when Using DDU Terminology

Now, DDU as I already said is an international commercial trade term.

This together with 12 others were established help create a happy medium between the buyer and seller.

Without them, the buyer and seller would be at constant negotiation. As such, international trade would simply not be as efficient.

You need to understand that a generic standard set of rules are invaluable and can be thought of as cost-saving measure.

Once a term like DDU is agreed upon, the parties can continue without having to worry who is responsible for freight, insurance or other related costs in the shipping process.

Port of Guangzhou

But before that, DDU shipping is quite a comprehensive term and using it requires a lot of considerations.

It requires that both the buyer and seller fully understand its basics and application for successful shipping.

Among the many things that you have to keep in mind when shipping DDU are:

• DDU applies to trade between free trade zones or customs union countries.

This is because sellers deliver goods after customs clearance, and if they are not free trade zones or customs unions, the risks are high.

• If the buyer fails to obtain an import license or other official documents as required and handles the customs formalities as are necessary for the import of the goods, it shall bear all additional risks of damage or loss caused by the goods.
• DDU is the actual delivery , the seller bears the risk before delivery, so not only does the seller has to handle the transportation, but also to apply for insurance and pay the relevant fees.
• In DDU shipping, the risk and responsibility of the seller end once the goods have been available at the named destination.

The buyer’s risk and responsibilities start after receiving the goods at the named destination.

He/she becomes responsible for the clearance of goods at imports customs, payment of duties and shipping to final destination.

• The DDU terminology applies to any mode of transport.

DDU Shipping with BanSar

Don’t doubt it, at BanSar we handle all kinds of shipping; FOB, DDP, DDU, CIF, etc. however you want it, we do it.

If you want to deliver goods from China to a specific port in your destination country, just let us know.

We will be happy to ensure that the goods are transported safely, timely and affordably to your chosen destination.

Don’t worry about anything.

We understand the stipulations of DDU shipping fully and are ready to execute them to our best knowledge.

So contact us now and let’s give you a free quote.

Conclusion

That’s it!

All you need to know about the DDU shipping term.

As you can see, each risk factor in DDU shipping has been defined so well.

Both parties can clearly understand what their obligations are.

There is simply no room for confusion or misunderstanding if one understands the DDU term well.

So, when you want to ship DDU from China to an international destination, make sure that you understand what the term means to you first.

This will help do away with any doubts or misunderstandings later on.

Good luck!

DDU Incoterms – The Definitive FAQ Guide

There is a lot of confusion when it comes to using Incoterms among inexperienced trade parties.

The reason is that such parties already have to deal with tons of paperwork, and it might be unclear from the first glance why you have to focus on Incoterms.

However, it is extremely important to determine the type of Incoterms with your supplier beforehand.

This guide is dedicated to one of Incoterms – DDU.

Read further to find out, what is DDU and how can you use it when buying goods from China.

Are DDU Incoterms still valid?

DDU rules were introduced to the publicity in the 2000’s version of Incoterms.

However, in 2010, the new set of rules were created which excluded DDU as a thing.

However, it doesn’t mean that you and your supplier can’t use them.

Let’s mention that Incoterms have recommendations spirit only, which means that you can use them as you think will be better for your business.

Following this rule, no one can disallow you to use old Incoterms.

What are the obligations of buyer and seller under DDU Incoterms?

Seller’s obligations:

1. Arranges the goods and commercial documents as required by the sales contract.
2. Arranges for export clearance.
3. Fully pays all goods delivery expenses to the destination point.
4. Assumes all risks associated with possible damage or loss of goods.
5. Seller is obliged to notify a buyer that the goods have been delivered to the carrier and provide the buyer with correct arrival information.
6. The seller has to provide the buyer with transport documents allowing the buyer to take possession of the goods at the named destination point.

Buyer’s obligations:

1. Buyer must pay the goods according to the sales contract.
2. Buyer must have all commercial documentation, licenses, and authorizations required for import and arrange import clearance at own cost.
3. Buyer must take delivery of the goods after they have been transported to the named destination point.
4. Buyer must assume all risks for the goods as soon as the goods have been delivered at the named destination point.
5. Buyer pays for all costs of transportation, import customs formalities, as well as all duties from the time the goods have been transported to the named destination point.
6. Buyer must accept the seller’s transport documents if they accommodate the sales contract and will allow the buyer to take possession of the goods after delivery to the named destination point.

Who will pay the freight charge, local destination, and destination charge if the Incoterms is DDU?

Under DDU Incoterms, all charges connected with the transportation of cargo to the named point of destination will be on the supplier’s side.

However, such goods will be not cleared in customs, so you won’t be able to order this cargo to your doorsteps for example.

This means that after you clear these goods in your country, you’ll have to pay for their later delivery to your premises.

Which Incoterms to choose: DDU and DAP?

At the checkout stage, it seems cheaper to use DDU. DDU does not imply processing fees linked with the duty that the seller must pay.

But it is the seller’s responsibility to inform the customer that duties will apply when the freight arrives in customs.

Often, a customs payment request becomes a surprise to customers.

In this case, customs will contact an independent customs broker and forward them the duties package. 

This leads to additional costs.

DAP fees are fixed and can be 3-4 times cheaper than DDU brokerage fees. 

Additionally, DAP reduces the chances that customers will abandon goods in customs.

This prevents you from paying additional costs for saving the goods.

What is the difference between DDU and DDP Incoterms?

DDP term stands for Delivery Duty Paid. 

DDP means that the seller arranges to pay for import duties and taxes in advance, such as a Goods and Services Tax (GST).

So If you’re using DDP, goods can be released for last-mile delivery immediately upon clearing customs.

It is opposed to DDU goods where the item could be held at customs until the relevant duties and taxes are paid.

Another key difference is that in the case of DDU seller meets all delivery expenses except GST (general sales tax) in importing country.

In the case of DDP seller must pay for GST and other import expenses. 

DDU and EXW Incoterms: how are these two correlate?

EXW (Ex Works) is the simplest of Incoterms.

Under these rules, the seller fulfills his obligations when he provides the goods at his enterprise or in another specified place (for example a factory, warehouse, store, etc.).

In practice, if you buy from a Chinese supplier, you have to be ready to pick up your goods from his premises in China.

EXW is always the cheapest contract because the seller is obliged to do practically nothing to deliver your goods.

However, it is also the way with the most hassle for you, because all the following processes (e.g. transportation to your country, customs clearance, etc.) will be on you.

What is the difference between DDU and CIP Incoterms?

The seller’s DDU delivery obligations are deemed to be fulfilled after he delivered the goods at the disposal in the country of the importer.

The CIP (Carriage and Insurance Paid to) incoterms means that the seller pays the freight to the destination and pays the minimum shipping insurance.

In the case of CIP, the buyer bears the risks for the goods from the moment he obtains the goods from the seller.

In the case of DDU, the seller bears the risks to the place specified in the delivery.

How DDU and CPT Incoterms differ?

iI case of CPT (Carriage Paid To), the seller fulfilled its obligations by transferring the goods to the carrier (confirmation of which is a bill of lading or similar document).

If the goods are damaged or destroyed during transportation, the buyer shall bring an insurance claim.

In the case of DDU, the seller fulfilled its obligations when the goods are delivered to the buyer at the indicated place.

If the goods are damaged or destroyed during transportation, the seller meets all costs.

DDU and FOB Incoterms: how to differ them?

FOB stands for Free on Board.

FOB terms state that the seller has completed the delivery when your goods get on board of certain vessel at the country of origin.

The risks under FOB terms transfer at the same time.

Basically, FOB and EXW terms are quite similar: as a buyer, you have to carry out the delivery from China by yourself.

What is the difference between CIF and DDU Incoterms?

Cost, Insurance, and Freight (CIF) are easy to understand.

Actually, the answer to it lies in the name: under CIF terms the supplier has to pay all costs connected with the freight and insurance.

In particular, the supplier has to pay all fees and duties connected with export customs clearance and delivery to your country, as well as with minimal insurance for your cargo.

But, keep in mind that the CIF terms don’t oblige the supplier to clear goods in your country.

It would be fair to mention that under DDU Incoterms you have to proceed through import clearance procedure as well.

What kind of Incoterms 2010 can be used instead of DDU?

As it was said earlier, 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 sphere.

Can you use Multimodal Transport in the Case of DDU shipping?

Multimodal transport

Multimodal transportation is common in international shipping and arises where one carrier uses various modes of transport.

In multimodal, the contractor can have your goods delivered by land, air, or sea.

Also, the contractor can seek the services of others in delivering your products.

Under DDU terms, it is the role of your supplier to choose a preferred shipping contractor.

The only rule is that the goods have to get to the agreed destination safely and on time.

How long does DDU shipping take?

Generally, shipping timelines vary depending on the mode of transportation used, supplier speed, and shipping distance.

Additionally, under DDU shipping, the customs clearance process tends to delay delivery in most cases.

The delay may be prolonged if you don’t have the requisite documentation and knowledge to go through the clearance process.

Hence, for goods to arrive on-time under DDU shipping, the buyer should employ a good customs broker’s services.

Any slight delays may affect your delivery schedule.

Also, you may want to communicate your deadline to the supplier.

This is to ensure that they hasten the production, packaging, and shipping process to ensure timely delivery.

Is DDU Applicable for Air Shipments?

Yes, it is.

Note that certain incoterms are only specific to a given mode of transport.

But in DDU shipping, it is applicable for inland, sea, and air transport.

Whichever transportation method you desire, you can agree with your supplier and have the goods delivered in DDU terms.

Air shipping

If you want to ship via airfreight, ensure that the airports you use, both at origin and destination, are suitable and convenient.

How does DDU Work?

The steps followed under DDU shipping are;

• The buyer chooses a supplier and agrees to the specific quantity of goods to be shipped.
• The buyer pays the DDU price for goods
• Both the buyer and seller agree on the destination country and place
• The seller chooses a carrier, delivers the goods for loading, and pays all costs involved
• Your product ships under the supplier’s supervision up to the agreed destination
• At the destination, the buyer handles all the documentation involved in customs clearance. He/she also pay the import duty and taxes.
• Goods are cleared for import
• The buyer loads the goods onto trucks and transports them to the final destination.

Note that the buyer can choose a representative at the destination in the form of a customs broker or freight forwarder.

The representative will clear the goods at customs and facilitate inland transportation up to the buyer’s door or warehouse.

Does DDU shipping include goods insurance?

No!

While DDU shipping places all risks and responsibility on the seller, it does not oblige them to pay for cargo insurance.

Similarly, it does oblige the buyer to pay for insurance.

When the need for insurance arises, the buyer can choose to facilitate this to ensure the goods’ safe delivery to their destination.

If the seller can agree, the buyer can delegate this responsibility to the seller.

In this case, the DDU cost will include the cost of insuring the goods during transit.

If you’re not comfortable shipping on terms that do not cover insurance, you may consider CIF or CIP.

These incoterms oblige the seller to acquire insurance coverage for goods up to the destination port.

Is DDU shipping Convenient for Specific Place Delivery?

When it comes to delivery to a specific point, different incoterms have varied rules regarding where the shipment is delivered.

Therefore, you should choose an incoterm that offers you convenience.

Delivery Duty Unpaid is a limiting incoterm when it comes to door-to-door or specific place delivery.

Since the custom duty is to be paid by the buyer at the port, the goods can only be delivered to the destination port.

As the buyer, you handle customs clearance before moving the goods to a desired selling point or warehouse.

Do I need a Customs Broker when Shipping under DDU Incoterm?

You’ve known the seller’s specific obligations and your obligations as the buyer from the above sections.

The seller is only responsible for the shipment until it reaches the docking destination.

If you lack the necessary experience needed in customs clearance, it will save you significantly to hire a competent customs broker.

The customs broker helps you handle customs clearance and documentation.

Given their experience and relationship with the customs authority, a good customs broker can help hasten the clearing and delivery of your goods.

What is not Covered Under the DDU Shipping?

DDU incoterm covers the obligation of both the seller and the buyer during the shipping process.

Additionally, it also states the point at which the risk for cargo passes from the buyer to the seller.

However, DDU incoterm fails to cover the following;

• Payment of goods- this is negotiated at a personal level between the buyer and the seller.
• Insurance- if you are looking for an incoterm that provides insurance cover, you should opt to use either CIP (Carriage and Insurance Paid) or CIF (Cost Insurance and Freight).

However, you can separately purchase an insurance cover if you’re shipping fragile goods under DDU terms.

• Passage of ownership.

What is the Legal Status of DDU Incoterms?

As stated earlier, the ICC publishes and regulates incoterms to safeguard international trade.

The incoterms are monitored and changed depending on trade-trends and demands of both buyers and sellers.

 Also, they are internationally accepted and thus, legally binding.

Nonetheless, the use of DDU incoterm is as per the buyer and seller’s wish.

Therefore, if you and the seller decide to trade on your own accord and rules, it is allowed and legal.

However, on choosing to trade under DDU incoterm, it becomes binding.

If any party fails to meet their legal obligation, the other party has the right to pursue the case in a commercial court of law.

What is the Difference Between DDU Shipping and Door to Door Shipping?

The incoterm that comes close to door to door shipping is DDP (delivery duty paid).

Here, goods are delivered directly from origin to the buyer’s door, all duties paid.

Door to door delivery

In contrast, DDU stands for delivery duty unpaid.

Meaning, goods are only delivered to the destination port.

At the destination port, the buyer handles the customs clearance process.

He/she also pays for import duty, taxes any other costs that may accrue from this point on.

Where Can I Learn more about the DDU Incoterm?

The ICC (International Chamber of Commerce) updates information on incoterms after every ten years.

You can find valuable information about DDU incoterm from their website.

Also, at Bansar, we ensure you understand everything about international shipping.

We value your business and research new incoterms and provide you with accurate and synthesized information on new and existing incoterms.

When does a Buyer Choose DDU Shipping Terms?

DDU shipping is perfect in situations where the buyer has vast experience in handling customs clearance.

It is cheap and with the only problem arising when paying for customs duty and handling documentation at the customs clearance.

Also, DDU Incoterm is perfect when the seller is not familiar with the importing country’s rules and regulations.

Finally, a buyer can choose DDU incoterm in cases where the cost of shipping is relatively high.

Also, where the buyer is not acquainted in tracking or hiring a freight forwarder, they can consider DDU shipping.

Should I use Specific Payment Method in the case of DDU Shipping?

It is not cast in stone to use any specific payment method with DDU shipping.

However, you choose to pay the supplier during DDU shipping is dependent on your needs and the supplier in question.

If they agree to payment via a letter of credit, PayPal or cash, then so be it.

Of importance is to clearly state your requirements, discuss on them and come to a mutual agreement.

Is it Safe to Ship under DDU Terms?

Yes, it is.

All you need to do is to clearly define the terms of sale and make sure that you both (seller and buyer) understand and agree to them.

This way, when a risk occurs, the liable party knows when and how to take responsibility.

Note, however, that DDU places a heavy responsibility on the seller.

Ideally, the seller assumes the most risk, liability and costs with DDU shipping, unlike the buyer.

If we’re to compare, we’d confidently say that DDU shipping benefits the buyer more than it does the seller.

On matters of safety, well, DDU shipping can be a big burden for the seller.

This is because it can quickly reduce profits if not handled well.

For the buyer, safety concerns should be directed towards the customs clearance process.

For buyers with little to no experience on customs clearance processes, DDU shipping can be risky.

It can also be costly if you need to hire a customs broker to handle the clearance process for you.

What are the Advantages of DDU Shipping?

DDU shipping benefits both the seller and the buyer in some way. 

The seller is responsible and caters for the costs and risks involved during shipping up to the destination port. 

On reaching the destination, the buyer should be liable for customs clearance and paying any other charges and taxes.

DDU is beneficial to sellers since most of them may not be aware of the import country’s customs regulations.

On the other hand, buyers are always knowledgeable of the rules and regulations in the countries they operate.

It takes time for sellers to learn and understand these laws.

The process is also expensive, and in most cases, many costly errors are realized. 

Nevertheless, the expensive mistakes that lead to delays and extra charges are the reasons that led to the ICC tweaking some of the DDU terms.

Another advantage of DDU shipping is its ability to allow easy tracking of shipments.

Under DDU incoterm, you can easily track a shipment during transit.

The idea is that a seller can easily track the shipment on loading until they dock.

Once the goods are in transit, they can easily track them and even plan their delivery schedules on time.

Is a Letter of Credit/Documentary Collection Allowed in DDU Shipping?

A letter of credit or a documentary collection is a form of payment security used in international shipping.

Letter of credit

More often than not, buyers can have doubts about the legitimacy of sellers.

In such instances, a buyer can decide to purchase a letter of credit and have the supplier paid after delivering the goods.

However, DDU shipping works differently.

It requires the buyer to pay for goods first before they are loaded for shipping.

Therefore, shipping under DDU termsmakes it challenging to employ the use of a letter of credit.

Besides, most sellers tend to have doubts about buyers who pay via a letter of credit.

Small to medium-sized suppliers tend to be especially wary of this payment method.

If you’re sourcing from a big corporation or a well-established supplier, you can try to negotiate the payment terms.

What are the Risks of DDU Shipping to the Seller?

Choosing an incoterm to use has different effects on both the seller and the buyer.

For the seller, DDU shipping makes them liable for the cost of shipping to a specific destination.

A lot of eventualities can arise in the course of the shipping.

All the risks at the time of shipping are on the seller.

Depending on the season, transportation costs differ, thereby negatively affecting the seller if the shipping prices are high.

What are the Risks of DDU Shipping to the Buyer?

The DDU incoterm states that once the goods arrive at the destination dock, the buyer is responsible and is in charge of them.

Also, the buyer does customs clearance, and if things go wrong, it could delay releasing the goods.

Besides, the buyer should have the necessary knowledge on how to handle customs clearance or employ a freight forwarder’s services.

 As you know, under DDU shipping, the buyer incurs costs and all fees associated with customs clearance.

It’s best to avoid mistakes that might lead to hefty fines and charges.