DDU vs DDP: What is the difference between? - Incoterms 2020

In the import and export of goods, the two trade terms DDU and DDP are often used, for many importers and exporters who do not know much about trade terms, DDU and DDP are like a pair of "fraternal twins", it is difficult to distinguish. On the surface alone, they are just the difference between "U" and "P", so in the process of exporting goods often encounter some unnecessary trouble. I do not know, DDU and DDP seem to be just a letter difference, the meaning of the two words but there is a world of difference. So, what is the difference between DDU and DDP?

Here is the list of contents:

· What is DDU?

· What is DDP?

· DDP vs DDP: What is the difference between?

· DDU vs DDP Advantages

· How to calculate the price of DDU and DDP?

What is DDU?

DDU stands for "Delivered Duty Unpaid". This trade term refers to the actual process in which the exporter and importer deliver the goods somewhere in the importing country, in which the exporter must bear all the costs and risks of the delivery of the goods to the designated place, as well as the costs and risks of customs formalities. It should be noted, however, that customs duties, taxes and other official fees payable on the importation of the goods are not included here. The importer is responsible for the additional costs and risks associated with not clearing the goods in time for the importation process.

If using this trade terminology, importers should make sure that when confirming the price with the forwarder, the other party should leave a written statement and stamp it to avoid any disputes later.

What is DDP?

DDP stands for "Delivered Duty Paid". This means that the exporter will deliver the goods to the importer after clearing the import customs at the destination specified by both the importer and exporter.

Under this trade term, the exporter has to bear all the risks in the process of delivering the goods to the designated destination, as well as to clear the customs at the destination port and pay the taxes, charges and other fees. It can be said that the seller has the greatest responsibility under this trade term. If the seller is unable to obtain an import licence, either directly or indirectly, then this terminology should be used with caution.

DDP vs DDP: What is the difference between?

The main difference between DDU and DDP lies in the question of who bears the risk and cost of the import clearance process at the port of destination. If the exporter is able to complete the import customs clearance, then DDP can be chosen. If the exporter is not able to handle the related matters, or is not willing to handle the import formalities and bear the risks and costs, then DDU terminology should be used.

The above is the basic definition of DDU and DDP and the difference between the introduction, in the actual work process, the exporters must be based on their actual work needs, choose the appropriate trade terms, so as to ensure the normal completion of their work.

DDU vs DDP Advantages

Delivery Duty Unpaid (DDU) Advantages

✔ No legal complications

✔ Visibility in supply chain operations

✔ Cheaper shipping options

✔ Best Buyer Experience

Deliveries Duty Paid (DDP) Advantages

✔ More streamlined process

✔ Less risks involved

✔ Transparency in financial transactions

✔ Better customer experience

How to calculate the price of DDU and DDP?

· CIF price = FOB price + export port local charge + ocean freight rates

· DDU price = CIF price + port of destination charge + door to door charge

· DDP price = CIF price + port of destination charges + door-to-door charges + taxes and fees at the port of destination