When arranging international logistics you’ll often see the different incoterms relevant to your shipping. Two common ones are DDU and DDP, but if we compare the two and look at the features and benefits of DDU vs DDP what are the outcomes?
Comparing DDU vs DDP shipping. What’s the difference?
First, let’s define both incoterms.
DDU – Delivery Duty Unpaid
Here the seller shoulders all costs except for any unloading cost, import tax and/or duty charges imposed by customs upon the arrival of the consignment. These charges must be paid by the recipient before it will be released and can be delivered.
It may be cheaper for vendors to use DDU shipping, but they risk irritating their customers if they don’t make it clear that they will be expected to pay certain charges upon the arrival of the goods. If a customer refuses to pay the fees, for instance, the vendor will have to pay additional charges for the return of the shipment from customs.
Note, DDU shipping terms are an old incoterm that is replaced by DAP (delivered at place) in the 2020 list.
The seller pays all costs involved in bringing the goods to the buyer including import duties and taxes. The seller is not responsible for unloading. This term places the maximum obligations on the seller and minimum obligations on the buyer.
As you can imagine, DDP fees are higher as they include all of the transportation, customs clearance charges, and shipping charges at the load and destination ports, specifically the duty and tax fees which are paid upfront to the logistics provider and are not included in DDU.
The benefit with DDP shipping is that the buyer will know that when the shipment arrives they won’t owe any additional customs payments and so it’s a more streamlined delivery that is unlikely to cause any confusion or dissatisfaction.
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