What Does Delivered Duty Unpaid Mean?
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.
By contrast, Delivered Duty Paid indicates that the seller must cover duties, import clearance, and any taxes.
Delivery Duty Unpaid (DDU)
Understanding Delivered Duty Unpaid
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; for example, "DDU: Port of Los Angeles."
With DDU, the seller assumes all risk until the goods are delivered to the specified location; then the risks are assumed by the buyer.
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 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.
- 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 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).
ICC and Incoterms
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. The terms were last updated in 2010, but a revision is currently underway and is set to be released in 2020.