Delivery Duty Paid Shipping
Sellers always have to consider import fees for shipping packages delivery duty paid Worldwide. This post explores all aspects import fees. What are the most common import charges? How to calculated duty? And prepayment of value added tax (VAT). Why DDP shipping is often preferable but not always the best option.
Delivered Duty Paid (DDP) shipping explained by Jet Worldwide's team
Delivered duty paid (DDP) shipping is a type of delivery where the seller is responsible for the shipping and imports fees. The fees paid on behalf of the receiver.
Note: In this post we use the terms receiver, consignee and importer interchangeably. The receiver of the goods are the actual importer even with import fees paid by the shipper. This post is for general information only.
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Shipping Terms explained
The International Chamber of Commerce (ICC) maintains the definitions related to shipping terms. They are more officially referred to as the ICC trademarked name "incoterm." The terms can be rather complex for large commercial shipments. For shipping e-commerce and most packages, the applicable terms are either deliver duty paid or unpaid. Read more about incoterms®.
Benefits of Delivery duty paid: DDP
DDP is beneficial for buyers as it reduces the risk of unexpected import costs. It can be a huge marketing benefit for sellers. An understanding of potential fees is important. The seller should broadly understand potential import costs. What can start off as a big sell ing point can end up being a huge financial burden for the seller.
DDP vs. other Incoterms®: What's the difference?
Logistics specific terms, many of which are acronyms, can be confusing, such as Incoterms® (explained above). DDP, DDU, and are most commonly used trade terms for e-commerce and package shipments..
DDP and delivered duty unpaid (DDU) differ. DDU requires the person importing the package to pay the duties and taxes.incurred once the package enters the destination country.
DDU shipments usually involves the carrier having to contact the customer for payment of import fees. The receiver is expected to pay the import fees prior to delivery. Alternatively the consignee can refuse the fees and have the packaged returned to sender.
DDP is a better customer experience. It is a cross-border option that considers all fees upfront. This gives the merchant the choice to either increase pricing or absorb the costs.
What is the Import Fee calculation?
The exact import process and costs vary by country. The general processes are similar. Import can include the following 5 elements:
- Entry preparation cost
- Duty
- Value added tax or sales tax
- Carrier disbursement fee
- Exceptional imports and non standard entries
Here are the details of each of the 5 items
Entry Preparation Costs
Do I have to pay the cost for a broker to import goods to the destination country?
Most goods shipped via express air carriers (FedEx, DHL, UPS) include entry preparation. Complicated and multi item shipments will incur additional fees.
Often, importers prefer to use their own customs broker. This is especially important for high volum importers and non standard entries.
Import Duty Costs
How can I estimate import costs?
Duty is most often expressed as a percentage of the value of the goods. For example, a 5% duty rate on goods valued at $1,000 would be $50.
Discover the ins and outs of Canadian import fees to avoid any surprises when importing goods.
Many countries have low value duty free thresholds. These allow import of low value goods duty free. Notable duty free thresholds include the USA (US $800), Europe (€150), and UK (£135). Shipments under these values can clear customs duty free. Useful example of import fees: In depth post explaining UK Import fees.
Canada has free trade agreements with most of the world's leading economies. Originating goods as defined by the relevant trade agreement can benefit from duty free import. Benefitting from Canada's free trade agreements.
Read More about customs duty calculation
Value Add Tax and DDP
Can value added tax be part of delivery duty paid?
Often, delivery duty paid refers to payment of both duty and taxes. In fact value added tax is usually much greater than duty.
Keep in mind that businesses often can claim back value added tax. However, VAT paid via a foreign seller cannot benefit from a refund by the importing business.
Disbursement Fee and DDP
Commercial carriers and post offices commonly include a disbursement fee. This fee often around 2-3% of the import fees paid on behalf of the receiver. The minimum disbursement fee averages between $15 and $20.
HS Code classification and and how they affect duty.
Exceptional Imports and non-standard entries
If the shipment is an exceptional import or a non-standard entry, additional fees may apply. These types of shipments require more documentation and processing, which can result in higher costs. It's important for sellers to be aware of these potential fees and factor them into their pricing. Additionally, it's crucial for importers to provide all necessary documentation and information to ensure a smooth customs clearance process. By understanding the import fee calculation process, both sellers and buyers can make informed decisions about which shipping options are best for their needs.
Does Shipping DDP cost more
The delivery duty paid option often incurs an additional fee. The DDP fee can be no charge (to the USA) . But commonly is around $20 extra. Paid at the time of shipping and included in the outbound rate.
Can I ship DDP with Canada Post
Postal services do not offer delivery duty paid services.
When exporters ship packages halfway around the world, there is so much that can go wrong. Every country has its own regulations when it comes to transport, import duties, and shipping fees. DDP encourages sellers to be diligent in selecting the best and safest routes for package delivery.
Safe delivery by air or sea can be challenging, depending on the type of product and where it's sold. DDP is a shipping agreement that guarantees sellers won't take the money and run.
There's a possibility that the sale may not happen if the buyer is unaware of the customs fees they have to pay. DDP allows for a smoother purchasing experience. The buyer doesn’t have to worry about paying the fees, with sellers and shippers paying international fees.
The DDP timeline
DDP's supply chain timeline is straightforward. The seller is responsible for most of the liabilities until the products reach the buyer.
DDU shipping has some drawbacks, such as:
DDU shipping can put customers at the mercy of any duties and taxes that may arise upon arrival, which is the most obvious disadvantage. Nobody appreciates unexpected charges, particularly if the merchant was not fully transparent during the shopping process. Due to the inability to pre-clear customs, DDU shipments may experience a significant delay before the buyer is aware of package availability.
Set up dedicated import processes to ensure DDP
Larger volume e-commerce merchants can set up direct shipping. Sellers can ship consolidating goods to major destinations via air freight. Having dedicated clearance is the most efficient way to manage import fees. Complete the form below to contact our team.
DDP and DAP are used for what reasons?
DDP and DAP are two commonly used terms to protect buyers from risks and costs when shipping goods to an agreed destination. To build trust and relationships with sellers, as well as to offer protection for international customers, this is done.
Shipping Terms versus Carrier Services
Note that a term used to represent delivery duty paid may vary from the exact INCOTERM®. The default option for shipping via common carriers is EXW. Which is itself a sort of delivery duty unpaid option.
Brief review: differences between Delivery Duty Unpaid (DDU) and Delivery Duty Paid (DDP):
Under DDP, the seller is responsible for all duties and taxes, whereas under DDU, the buyer is responsible for them.
