Delivered Duty Unpaid (DDU): What It Is and How It Works

What Is Delivered Duty Unpaid (DDU)?

Delivered Duty Unpaid (DDU) is an old international trade term indicating that the seller is responsible for the safe delivery of goods to a named destination. The seller pays all transportation expenses and assumes all risks during transport.

The buyer becomes responsible for paying import duties when the goods arrive at the agreed-upon location as well as further transport costs. Delivered Duty Paid (DDP) indicates that the seller must cover duties, import clearance, and any taxes, however.

Understanding Delivered Duty Unpaid (DDU)

The International Chamber of Commerce (ICC) was originally formed after World War I to foster prosperity in Europe by setting standards for international trade. This group published a set of standardized terms for types of shipping agreements in 1936, known as Incoterms.

Incoterms are contract specifications that outline who bears the costs and risks of international transactions. They're subject to change at the discretion of the ICC. The ICC seeks to simplify matters for businesses by standardizing its terms because of the legal and logistical intricacies of international shipping.

Delivered Duty Unpaid (DDU) isn't included in the most recent 2023 edition of the International Chamber of Commerce's Incoterms. The official term that best describes the function of DDU is now "Delivered-at-Place (DAP)."

DDU is still commonly used in international trade parlance, however. The term is followed by the location of delivery on paper, such as "DDU: Port of Los Angeles."

Responsibilities Under DDU

The seller secures licenses and takes care of other formalities involved in exporting a good according to DDU arrangements. It's also responsible for all licenses and costs incurred in transit countries as well as for providing an invoice at its own cost.

The seller assumes all risk until the goods are delivered to the specified location but it has no obligation to obtain insurance on the goods. 

The buyer is responsible for obtaining all necessary licenses for importing the goods and paying all relevant taxes, duties, and inspection costs. All risks involved in this process are borne by the buyer. All further transportation costs and risks fall on the buyer when the goods are placed at the disposal of the buyer.

Delivered Duty Unpaid (DDU) vs. Delivered Duty Paid (DDP)

Delivered Duty Unpaid (DDU) means that it's the customer's responsibility to pay for any of the destination country's customs charges, duties, or taxes. These must all be paid for customs to release the shipment after it arrives.

Delivered Duty Paid (DDP) means that it's the shipper's responsibility to pay any of the customs charges, duties, and/or taxes that are required to send the product to the destination country.

Advantages and Disadvantages of DDU

The primary benefit of Delivered Duty Unpaid (DDU) shipping is that it gives the buyer more control over the shipping procedures. Having a higher degree of control over the process can be paramount for global buyers looking to keep a consistent flow of inventory.

Controlling costs and tracking shipments are typically easier under DDU shipping than in DDP shipping. Buyers are naturally more knowledgeable of their own country's shipping customs.

From the seller's perspective, DDU shipping provides the ability to take more of a "hands-off" approach when it comes to the destination country's shipping rules. The seller is simply responsible for getting the cargo to its destination where the buyer can handle all the legal complications.

There are also disadvantages to DDU shipping. The biggest problem for buyers is the possibility of surprise duties or tax charges when their shipment finally arrives. That's a big negative for buyers but it's not ideal for shippers either because disgruntled customers may refuse to pay for their parcel to be delivered.

The Bottom Line

From the seller's perspective, DDU shipping provides the ability to take more of a "hands-off" approach when it comes to the destination country's shipping rules. The biggest problem for buyers in DDU shipping is the possibility of surprise duties and/or tax charges when their shipment finally arrives. The term "Delivered-at-Place (DAP) has been used in place of DDU since 2010. Look for this updated term if you have questions regarding shipments or deliveries.