Delivered Duty Unpaid (DDU) is an Incoterm used in international trade to signify that the seller is responsible for delivering goods to a designated location in the buyer’s country, but the buyer assumes all risks and costs associated with importing the goods, such as customs duties and taxes.
Seller’s Responsibilities
Under DDU terms, the seller must ensure that the goods are:
- Properly packaged
- Transported safely to the named place of destination
- Accompanied by the necessary documentation
Transportation Costs
The seller bears all transportation costs up to the agreed point of delivery. This includes:
- Freight charges
- Cargo insurance (optional but recommended)
- Loading and unloading costs
- Any other costs incurred until the goods reach the specified destination
Risks
The seller is also responsible for any risks associated with the transportation of goods until they are ready for handover at the buyer’s designated location.
Buyer’s Responsibilities
Once the goods arrive at the agreed place of destination:
- The buyer must handle the importation process.
- The buyer pays all import duties, taxes, and any other customs-related costs.
- The buyer assumes all associated risks from the point of delivery.
Import Duties and Taxes
The buyer is responsible for:
- Clearing the goods through customs
- Paying any import duties, VAT, and other taxes
- Completing necessary administrative procedures
Practical Applications
International Trade and Logistics
DDU is commonly used in international trade where the seller and buyer have clear, established roles in the transportation process. It allows sellers to offer competitive shipping solutions while giving buyers control over the importation process.
Examples and Scenarios
- Scenario 1: A UK-based seller agrees to ship goods to a warehouse in France. The seller covers all costs and risks up to the French warehouse, but the buyer takes care of French import duties and taxes.
- Scenario 2: A US company ships machinery to a factory in Canada. Under DDU terms, the US seller ensures delivery to the Canadian factory, and the Canadian buyer manages customs.
Historical Context and Evolution
Incoterms
Introduced by the International Chamber of Commerce (ICC) in 1936, Incoterms (International Commercial Terms) have evolved to facilitate international trade by standardizing the responsibilities of buyers and sellers in global transactions. DDU was replaced by Delivered at Place (DAP) and Delivered at Place Unloaded (DPU) in the 2010 Incoterms update, but it is still widely recognized and used in historical contexts.
Comparison with Related Terms
DDU vs. DDP
- Delivery Duty Paid (DDP): In DDP, the seller takes on not only the shipping costs and risks but also the responsibility of clearing goods through customs and paying duties and taxes.
- Delivered at Place (DAP): Similar to DDU but more specifically defined in the current Incoterms, where the seller delivers to a specified destination without unloading, and the buyer handles import duties and clearance.
- Delivered at Place Unloaded (DPU): Seller delivers the goods, unloaded at the specified place; the buyer then handles import procedures.
FAQs
What costs are excluded under DDU?
Can DDU be used for all types of goods?
Why was DDU replaced in the 2010 Incoterms update?
References
- International Chamber of Commerce (ICC)
Summary
Delivered Duty Unpaid (DDU) is an important term in international trade that outlines the responsibilities of buyers and sellers in the transportation and delivery of goods. While DDU places the onus on sellers for transportation, buyers must manage and pay for import duties and customs clearance. Understanding DDU and its related terms is crucial for efficient and effective global trade operations.
