DDP , Delivered Duty Paid shipping is a method of Delivered where the seller assumes all risks and costs of shipping the goods until they reach their destination.
When shipping from China To USA, Delivered Duty Paid shipping is a general shipping method developed by the International Chamber of Commerce to help standardize shipping options on a global scale.
Many companies will only use Delivered Duty Paid when shipping goods by air or sea. Buyers benefit greatly from DDP because they take on less risk, responsibility, and costs. While DDP is a good deal for the buyer, it can be a big burden on the seller as it can quickly reduce profits if not handled properly.
Another type of trade term is DDU
DDU is Delivered without duty paid at the destination port, and the goods are handed over to the buyer at the designated destination for disposal;
Delivered Duty Paid shipping is the Delivered after duty payment at the destination port, which means that the seller has completed the import customs clearance procedures at the designated destination, and will deliver the means of transportation at the designated destination. The unloaded goods are handed over to the buyer.
The difference between DDP and DDU
Import declaration is different
DDU is for the seller to handle import declarations and bear the pre-Delivered costs; Delivered Duty Paid shipping is for the buyer to handle import declarations, assume the responsibility and risk of customs formalities, and pay handling fees, duties, taxes and other fees.
With DDU, customs will contact the customer once the package arrives, and the customer may even need to go to the local post office to pick it up. Many times, customers don’t realize their order is a DDU and will contact the merchant’s customer support line, cancel the order, or reject it and return it to the sender.
The main steps of Delivered Duty Paid shipping
1. The seller delivers the package to the carrier – seller’s responsibility
The seller will give the package to a trusted carrier, or the carrier may pick it up. Sellers are encouraged to use a trusted carrier as it reduces overall shipping costs.
2. The package is delivered to its place of Delivered – seller’s responsibility
Packages can be shipped by any mode of transportation, including sea, air freight from china to USA. With a trusted shipping partner, sellers take less risk and can be sure that the package has actually been delivered.
3. When the package arrives at the destination, value-added tax (VAT) will be charged – the seller’s responsibility
One of the benefits of Delivered Duty Paid shipping is that buyers do not have to pay VAT. Bear the cost of goods value-added tax.
4. The package is delivered at the designated destination – the responsibility transfers to the buyer
Once the package arrives, the buyer is now responsible for the actual product. For D2C companies, you can expect to hear from customers if there are any issues with Delivered.
Cost of Delivered Duty Paid shipping
Shipping products by sea or air can be expensive. You need to take the time to calculate the cost of shipping your product internationally. Click here to see rate calculators from different carriers.
Import and export duties
If the Delivered Duty Paid shipping is not handled properly, inbound shipments are likely to be inspected by customs, causing delays. Delayed shipments can also occur if you end up opting for a less reliable shipping service, as it is the cheapest option.
Any damage to the product is at the seller’s expense. As a seller, you have to pay for any damage to the products and even have to ship them to their destination again.
Although shipping insurance is not mandatory, most sellers prefer to purchase insurance to reduce risk.
Delivered Duty Paid shipping assigns sellers responsibility for paying VAT. However, it can be changed with the consent of the buyer and the seller. VAT can be expensive and is sometimes charged at 15-20% of the value of the goods. In many cases, buyers may be eligible for VAT refunds depending on how they handle the goods.
VAT refunds are owned by the buyer. This means that, at best, you have to pay VAT; at worst, you pay VAT and your customers get VAT refunds.
Storage and Demurrage Fees
Under the Delivered Duty Paid shipping , sellers must bear the costs associated with customs clearance. This includes any storage or demurrage charges due to delays by customs authorities, other government agencies, Delivered drivers and air/sea carriers. Since these are unanticipated costs, they can quickly eat into your profits or offset them entirely.