Free on Board to Delivered Duty Paid
The shipping industry and especially the international shipping industry has a list of guidelines that have been developed by the International Chamber of Commerce to assist in the communication among shippers. These guidelines are known as Incoterms and refer to International Commercial Terms and act as a set of rules for buyers and sellers to facilitate the delivery of goods or long term storage goods.
What is Free on Board Shipping (FOB)?
Free on Board (FOB) shipping is a very popular incoterm used by many buyers. This method of shipping requires the shipper to be responsible for all of the shipping costs up until the goods are safely on the ship and ready to sail. Once the cargo is on board, the buyer is responsible for the remainder of the trip.
In most cases, there is an equal sharing between shipper and buyer of all the costs related to the movement of the cargo. This involves the cost of shipping, the insurance for the cargo, and the absorption of any risks that may be present during the completion of the shipment.
What is Delivery Duty Paid (DDP)?
The shipping Incoterm DDP is the situation where the seller accepts all of the costs and the risks and responsibilities for the safe shipment of the cargo from the point of origination to the agreed-upon destination. This agreement includes the payment of shipping costs, export, and import duties, insurance, and any other related or emergency costs incurred while the cargo travels from one point to the other.
With the DDP Incoterm, the seller accepts the maximum responsibility for the shipment. The seller must arrange for all modes of transportation during the shipment including the import and export clearances, negotiations and fees if there are delays, and the security of the cargo through adequate insurance coverage.
FOB to DDP Benefits
Both the FOB and DDP methods of shipping are popular because in one, FOB, the costs of shipping are shared, and this means that both the seller and buyer share the cost as well as the risk of making sure the cargo arrives safely. This can be a good choice for the buyer who wants to maintain some control over the process and possibly even save money if they have a network of transportation options.
In the case of the DDP Incoterm, the buyer pays for the reduction of stress that the seller can offer by controlling all aspects of the shipment. Likewise, the seller can save money by good networking and planning, and ultimately the buyer will probably pay a little more because they have given up the responsibility and risk associated with the cargo.
The International Container Shipping Companies, Asiana USA has many years of experience and knowledge working with either the FOB Incoterm or the DDP Incoterm. We specialize in moving your cargo as efficiently as possible through proven logistics planning and the professional follow-through expected. Contact us today at AsianaUSA.com for a consultation on the best method for your shipment.
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