What Is Delivered Duty Unpaid (DDU)?
Delivered Duty Unpaid (DDU) is an international trade term where the seller delivers goods to the buyer’s destination country, but the buyer is responsible for paying import duties, taxes, and completing customs clearance. It indicates a shared responsibility where the seller handles transportation while the buyer manages all import-related formalities and costs.
Key Points
The seller delivers the goods to a named destination in the buyer’s country.
The buyer is responsible for import duties, customs clearance, and local taxes.
The seller covers export documentation, origin customs, and international freight.
Risk transfers from seller to buyer when the goods arrive at the agreed location.
Commonly used in international shipments where buyers have better knowledge of local customs processes.
DDU is not part of the latest Incoterms, but many businesses still use it informally.
Benefits and Challenges
Benefits
Gives buyers control over local customs processes and duty payments.
Allows sellers to avoid complex and unfamiliar import regulations of the destination country.
Can reduce landed costs for buyers who have preferential duty structures or clearance agents.
Offers flexibility for buyers who prefer handling the final leg and paperwork.
Challenges
Buyers must be prepared for unexpected duties, storage charges, or inspections.
If buyers delay customs clearance, cargo may incur demurrage or detention.
Confusion may arise because DDU is outdated and replaced by DAP and DPU under Incoterms.
Miscommunication between seller and buyer can lead to disputes about who pays which charges.
Example Scenario
A seller in Germany ships electronic components to a factory in Chennai under DDU terms.
Step-by-step:
The seller arranges export clearance in Germany and books international freight to Chennai.
The shipment arrives at Chennai Port, and risk transfers to the buyer at the designated terminal.
The buyer’s customs broker takes over, pays import duties and GST, and completes customs clearance.
The buyer arranges local trucking to transport the goods to the factory.
The goods are delivered successfully because both parties understood their responsibilities clearly.
Conclusion
Delivered Duty Unpaid offers a balanced arrangement where sellers manage global transport while buyers handle their own country’s import complexities. Although it is no longer part of the official Incoterms, DDU remains popular in many trade contracts due to its flexibility. Understanding DDU helps prevent misunderstandings and ensures a smooth handover during international shipments.
Frequently Asked Questions (FAQs)
1. Is DDU still an official Incoterm?
No. It has been replaced by DAP and DPU in the latest Incoterms, but businesses still use DDU informally.
2. Who pays import duties under DDU?
The buyer pays all duties, taxes, and local customs clearance charges.
3. When does risk transfer under DDU?
Risk transfers when the goods reach the named destination in the buyer’s country.
4. Does the seller arrange local delivery?
No. The seller only arranges transport to the destination point. Local delivery beyond that is the buyer’s responsibility.
5. Why do some companies still use DDU?
Because it provides clarity in older contracts and suits buyers who prefer managing their own customs procedures.