In any given day there are millions of containers, boxes, and cartons placed on ships, trucks, airplanes, and trains moving tons of cargo and goods around the country and to all parts of the world. The shipping industry has an established standard for defining the kinds of trade and the rules regulating how this trade takes place. Under DDP Incoterms these guidelines govern the DDP (Delivery Duty Paid) Incoterm developed by the International Chamber of Commerce to define the responsibilities of the seller in the trade transaction.
In 2010, Incoterms were updated by the International Chamber of Commerce, and currently, there are two main categories of incoterms organized by modes of transportation. The DDP Incoterms are included in Group I and apply to all modes of transportation. Group II Incoterms only apply to sea and inland waterways. Each of these Incoterms carries distinctive responsibilities for both the seller and the buyer. At f Asiana USA, we adhere closely to these guidelines.
What is the DDP Incoterm?
Delivery Duty Paid (DDP) is the Incoterm that means that the seller places the goods or cargo at the buyer’s disposal and the seller also takes care of the mode of transport and the customs associated with this transport. The seller also ensures that the goods are ready for unloading at the designated shipyard or warehouse.
In addition, the seller bears all the costs associated with the transport of the goods to the proposed destination and they have to cover the costs of the import and export dues and duties. The formalities that accompany the customs procedure are also the responsibility of the seller. Since this is in Group I the seller is accountable for all modes of transportation even when more than one mode is used.
The DDP incoterm is used by the buyer who wants nothing to do with the shipping of the product, and they want to place an order and have the goods delivered to their door with no responsibility for mode of transportation, customs, or duties.
Detailed Seller Obligations
The responsibilities of the seller under the DDP Incoterm end only when the goods have moved safely from the manufacturer to the door of the buyer. The seller carries all the risks while the cargo is in transit. At the origin of the shipment, the seller has to ensure that all export permits, quotas, and special documentation relating to the goods has been properly prepared and filed.
The seller has also to arrange and pay for all types of transportation and carriage needed to move cargo from one place to another including the distance from the packing area to the delivery destination and on and off any on-carriage modes that are needed for the safe passage of the goods.
Finally, the seller must coordinate all the custom activities and formalities and pay all dues and fees associated with making sure the goods arrive at the correct destination.
The seller in a DDP Incoterm transaction needs to be aware of when there are certain customs requirements for the goods being imported by the buyer. This may require specific paperwork generated by the buyer that must be in place before delivery can be facilitated. Also, there is no international requirement for insurance on either the part of the seller or the buyer. Insurance is a necessity and must be negotiated within the terms of the shipping agreement.
On the surface it looks like all the costs and responsibilities for the movement of goods under the DDP Incoterm rest with the seller. However, the buyer must be cognizant that although most of the responsibility rests with the seller the seller will undoubtedly pass these costs on to the buyer. For this reason, the buyer must be careful to understand the origin of costs and fees that are included in the final invoice.
Asiana USA has expertise in the shipping of goods to the customer’s warehouse and is well-versed in the practices of the shipping business and the rules of Incoterm shipping. Call us for a quote at 855-500-1808.