What is DDU?

Delivery duty unpaid (DDU) is a shipping agreement where the seller is responsible for undertaking all the risks and related costs, except the customs. In a DDU agreement, a buyer must pay customs fees and taxes. The International chamber of commerce introduced this shipping agreement, making it globally acceptable. 

Significance of DDU in an E-commerce Shipping and Delivery

DDU is touted as a balanced shipping agreement where the customer shares the responsibility of clearing the customs duty while the seller bears other related risks.

  • Balanced risk allocation: DDU requires the buyer to pay for the customs duty when importing their product. The seller is also held accountable for paying all the related expenses incurred during the delivery. Unlike DDP, DDU balances the risks equally, thus providing the seller with breathing space.
  • The buyer gets more control: In a DDU shipping agreement, the buyer enjoys more control over the shipping process. It also saves a seller on operational costs because fewer hands are required during transit. 

Pre-requisites of DDU and How It Works

As DDU is a globally accepted agreement, there are no such requirements that the parties must fulfill. This agreement is usually made while placing the order.

  • Packing and documentation: After receiving an order, the seller must pack and attach all the necessary documents for shipping and customs clearance. 
  • Delivery at customs: Once the product reaches the customs office, the buyer must clear the taxes and the related documentation. After winding up the process, the buyer receives the product. 

Use Case With DDU

A buyer from Manila ordered a mini-fridge from a brand based in Melbourne, Australia. The seller packs and ships the product with all the required documents. Once the product reaches the Filipino shore, the buyer is notified with an update. Subsequently, he pays the customs duty and receives the product.

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