Delivered Duty Paid Shipping — What does DDP mean? Updates of Incoterms 2020
Source: DDP Delivery Services — What Does DDP Mean? — Incoterms 2020 Updates (ddptransfreight.com)
The tremendous growth of the e-commerce sector has changed the perception of shopping and business. People worldwide are now inclined towards online shopping and getting things from different destinations. Things assumed to be unapproachable are now easy to get with e-commerce platforms like Amazon, Ebay and many more e-businesses. It has converted the world into a global village. Businesses are expanding their networks with international trades. Also, international trade between buyers and sellers can now be done easily.
Buyers are more likely to purchase the items from another country to get new customers interested in imported products. One needs to understand some terms before starting any business to smoothly trade with international merchants. This international commercial transaction in commerce usually employs two major types of terms for delivery of goods: DDP Delivery duty paid and DDU Delivery duty unpaid.
Although there are many incoterms for business transactions, but most of the E-Commerce industry uses either DDP — Delivered Duty Paid Delivery Services or DDU — Delivered Duty Unpaid Delivery Service.
DDP — delivery duty paid and DDU — delivery duty unpaid are two different incoterms published by the international chamber of commerce. These abbreviations of DDP and DDU are periodically published and updated by the international chamber of commerce. All the world trade follows these terms, which harmonize the trading system and clarify the responsibility and duties of each party while doing trade. DDP delivery services is a business transaction term that puts more responsibility on the freight forwarder which needs to ensure payment, transportation, and duties of the product until it is delivered to the customer.
In contrast to the DDP delivery services, DDU has a few relaxed responsibilities toward the transaction for shipping service providers. In this, the shipping service provider aka freight forwarder is only responsible for the transportation of the goods, and the duties at the destination are to be paid by the customer himself.
The International Chamber of Commerce (ICC) and Shipping Incoterms
Incoterms abbreviated as International Commercial Terms are the internationally accepted trading terms that are published and updated after every decade by the international chamber of commerce and are used globally to trade commercial shipments. DDP definition published by the international chamber of commerce explains that the freight forwarders are liable to pay all the cash, documentation, and processes until the goods are delivered at the final destination.ddp delivery services This is one of the major incoterms in ICC. International chamber of commerce is an international business organization working alongside other business organizations to create harmonized trading systems and terms. It also helps the buyers and sellers to do business easily. Incoterms or International commercial terms published by the International chamber of commerce are widely accepted by the government, organizations, trading bodies, and buyers & sellers around the globe. Incoterms are very helpful in international trade, and they erase any confusion between the buyer and seller residing in different countries. Incoterms allows the business bodies to know about the terms and conditions for the commercial transactions of their goods. Incoterms have assigned the duties and responsibilities of the seller and buyer clearly.
Seven rules of Incoterm 2020:
The international chamber of commerce publishes and updates the Incoterms every decade. The latest version of the incoterms was published as incoterm 2020. These incoterms cover mostly all the mode of transportation that is involved in international trade. These important seven rules for the E-commerce trade business are as follows:
DAP — Delivered at Place
DPU — Delivered at Place Unloaded
DDP — Delivered Duty Paid
EXW — Ex Works
FCA — Free Carrier
CPT — Carriage Paid
CIP — Carriage and Insurance Paid To
The international chamber of commerce ICC held periodical events to elaborate the different rules and specify any difference from their prior versions. ICC training is held to demonstrate the roles and responsibilities of sellers, buyers, transporter, and other risk factors.
Incoterms for sea transport is elaborated through four incoterms that cover all the transaction that is sea-borne,
FAS — Free Alongside Ship.
FOB — Free on Board.
CFR — Cost and Freight.
CIF — Cost Insurance and Freight.
DDP — Delivery Duty Paid
Whenever an import or export order is placed by a trading business company, the critical decision is selecting the right incoterm option while finalizing the rates of a product. These terms determine the roles and responsibilities of buyers and sellers separately. DDP delivery services are the most opted terms by the buyers as DDP shipping best suits them. DDP definition can be described as when a seller enters an agreement with the buyer for the sale of goods on DDP delivery services term; he is responsible for delivering the goods to the customer, bearing the cost of transportation, taxes and customs duty till customer port of destination; ddp delivery services for which he may use the services of any freight forwarder. In DDP shipments, the seller or its freight forwarder needs to understand the formalities of customs and taxes at the port of destination, as he is responsible for paying taxes at the destination port. In DDP shipments, the seller or its freight forwarder should appoint a local agent to clear goods at the destination port.
Why is DDP the most used incoterm in international trade?
A service provider that offers DDP delivery services is a person or a company that manages the complete job and pay for the total costs associated with transportation of the cargo all the way to the buyer’s door. DDP Transfreight is a service provider that is offering door to door Delivered Duty Paid delivery services being fully responsible for the shipment until it is received by the customer. We fulfill all the responsibilities including paying for shipping costs together with simplifying the entire process by acting as in charge of every step along the way. We facilitate the customer with compliance assessment, storage, customs clearance, and warehousing. We commit to transport the products delivered duty paid.
A lot of people wonder why the DDP delivery services are the best solution for smooth international trade; here are a few benefits:
Lesser risk:
When hiring DDP delivery services, the company in charge of your DDP shipping will take charge of all the responsibilities related to the shipment until it gets to its ultimate destination. Consequently, if you employ a reliable company like DDP Transfreight with all the assembly and knowledge to take care of all the DDP shipping processes, there will be minimum chances of facing problems along the process cycle.
At DDP Transfreight, our staff of highly experienced specialists are ready to provide our clients with full assistance for their products to be delivered duty paid. We help in simplifying a lot to the shipping procedure.
Information of price:
Another benefit of this kind of service is that the landed budget is known at the time of the buying and it will already contain all of the duties and fees that your shipment can possibly meet until it reaches its target. This is well for the buyer since it ensures that they won’t have any disbelief at the end of the freight. DDP Transfreight provides you DDP delivery services that will analyze your requirements and show you what the rate of the freight with all of the belongings to be considered and incorporated.
Hassle-free:
Freight forwarders like DDP Transfreight already have a lot to fix on a daily basis and there is nothing well than being able to employ a company that do their transportation needs in a complete way. This is basically what the DDP delivery service offers, a hassle free transportation key, where the company in charge will look after of everything for you. From picking up the cargo, liable for quality control, taking care of its documentation, delivering it timely and safely, paying all the taxes and charges related to it, till the final destination.
DDU — Delivery Duty Unpaid
A buyer or seller may enter into an agreement to trade goods on DDU Delivered Duty Unpaid terms. In this business transaction term, the seller will only be responsible for the delivery of goods to the destination port mentioned in the agreement. The duty, taxes, customs at the port of the destination will be the responsibility of the buyer. ddp delivery servicesThe responsibility of the seller will be till the point the cargo reaches the port of destination, after that point the buyer will be responsible for the goods.
In DDU the seller will still be responsible for the transportation of the goods, taxes and the port of loading, and other formalities at the port of origin. The international chamber of commerce has replaced the term DAP — Delivered At A Place by erasing the older used term DDU — Delivery Duty Unpaid in its latest publication of Incoterm 2020.
DDU — delivery duty unpaid, the seller was responsible for the transportation and handling of cargo from the port of destination till their premises such as warehouse etc.
DAP — Delivered At Place and DPU — Delivered At Place Unloaded:
In the latest edition of the incoterm 2020, the older term of DDU — Delivery Duty Unpaid has been replaced by a new version DAP — Delivered At Place. Under DAP the buyer is responsible for the duties, taxes, customs, and unloading at the port of destination. DAP is used for agreements for any type of mode of transportation such as sea, land and air.
Another replacement in incoterm 2020 is the introduction of DPU — Delivered At Place Unloaded; at the place instead of DAT — Delivered At The Terminal. DAT seems to be more suitable for air deliveries at terminal, that is why that has been replaced and the term DPU can be used for any type of mode of transportation. In DPU the seller is responsible for the transportation to the port of delivery as well as unloading the cargo at the destination. DAP and DPU business terms has further eased the way of business for the sellers and buyers.
CIF/CFR/CIP
Goods that are shipped under the term of DDP — delivery duty paid or DDU — delivery duty unpaid; in both the cases the insurance may or maybe not the part of the cost, it depends on the buyer’s and seller’s agreement.
The business terms regarding the cost of the goods that mention CIF means that it includes the cost of goods, transportation, and insurance.
When the business transaction term CFR or C&F is used, that means the cost of goods and freight is included, and the buyer himself is responsible for the insurance of the goods.
Usually, the buyers are more interested in buying products on a CIF basis as their cargo is secured by the seller at its cost.
Another term similar to the CIF and CFR basis is CIP (Carriage and insurance paid to). In CIP the seller of the good is responsible to pay for the transportation of goods and as well as the insurance till a mentioned location, which may differ from the final place of destination.
Where are the commercial incoterms printed?
The incoterm is the business transaction term that specifies the roles, responsibilities, duties, and risk of buyer, seller, carrier of the cargo that enter into an agreement based on the specific term. These specific terms are mentioned on different trade documents to avoid any conflict of interest. The documents the mention these terms are the agreement letter, contract, Bill of lading, commercial invoice, airway bill and packing list.
The mentioning of the incoterm on the different documents is very important, as it reduces any chance of business conflict between the buyer, seller, and carrier.
Why is the incoterm important in trade business?
In the current era of globalization, the importance of trade has increased manifold. The buyer and sellers are usually sitting in different countries or even on different continents, and it is very difficult to set the role and responsibilities to the seller or buyer or the carrier of goods. It is the basic requirement that a harmonized system of terms is specified that is understood and acceptable to all the buyers, sellers, or carriers throughout the globe. International chamber of commerce is an international business organization that periodically publishes these harmonized business terms, and also holds training so that the businesses are well versed with this term. Incoterms have eased the way of doing business.
