Different freight shipments come with different rules
Last week, we wrote about C & F versus CIF destination (more here). This week, we have a quick tutorial for shippers who are sending freight to their destinations via air or ocean consolidation services with two very important terms in mind: Delivery duty paid (DDP) versus delivery duty unpaid (DDU).
Although it’s not all that common for shippers to export all the way to their international customers’ site, it happens when affiliated or when a buyer requires a price to its final destination door, which, as you probably know, happens enough to care about getting these details right.
Delivery duty paid versus delivery duty unpaid
Most shipments are forwarded freight prepaid to a destination port or airport, however, occasionally, shippers need their air or ocean shipments to reach the import customers beyond the port/airport of destination & request to include the terminal, import clearance & delivery to the overseas site. This is more common when the items being shipped are going to their end-use destination, not being resold.
For instance, we have a US manufacturer requesting to ship construction equipment into a single 40’ HQ container (which are slightly taller than general containers) from Henderson, NV 89106 USA to Weyerbusch, 57635 Germany, for their international affiliate. Since this equipment is not for resale, they requested of the international forwarder to ship based on a DDP Weyerbusch, 57635 in Germany.
Here’s what comes next:
1. Getting started wtih DDP
The forwarder’ s job is to initially retrieve all charges from the position of a container to Henderson, NV all the way to Weyerbusch in Germany. The services, requirements, and associated fees being considered were:
~ Container positioning in Las Vegas, NV 89106
~ Chassis fee
~ Port congestion surcharge ( if applicable )
~ Ocean Freight Los Angeles, CA to Bremerhaven, Germany per 40’
~ Export documentation ((AES) & Bill of lading preparation fees
~ Pier pass
~ Clean truck fee
~ Optional insurance
~ 1 Weekly sailings, with an estimated transit time of 27 days.
~ Terminal / Port – Airport fee
~ Overseas Import clearance
~ Tax & duty
~ Delivery of the container
Notes: Any Customs exam & storage fees are random in nature & cannot be quoted in advance. Charges can be paid directly to Customs or their designated exam site.
(link: inside dimensions of containers at www.etcinternational.com)
To execute the export declaration, the shipper provides the following documents:
~ 1 Commercial invoice (origin / destination names & addresses – EIN number – description the cargo per item with harmonized code number & value per unit – Freight term DDP total)
~ 1 Packing list (origin / destination names & addresses, list of item inside the containers – weights)
Making the DDP vs DDU declaration
As for DDU or DDP, the designated international shipping company prepares a bill of lading draft giving the shipper a chance to correct the shipping information & freight terms DDP above and beyond any verbal instructions. The forwarding company will get the original bill of lading or Telex release at destination issued based on the approved draft. Therefore, the shipper in Henderson, NV will assume all of the above addressed shipping fees (door to door).
In conclusion, the use of a DDU or DDP is seldom among affiliates or agreeing parties, but there are definitely times when it will make sense to go this route. A solid knowledge of your freight terms (www.etcinternational.com) & a conversation with your international customers followed up by a pro-forma invoice can prevent a misunderstanding in billing & freight cost.
Interested in scoping out your freight shipment with a freight forwarder with over 30 years in the industry and network affiliates in every country on the planet? Request a quote with ETC International Freight System today!
While you’re at it, why don’t you check out this free conversion calculator download, so you have a simple tool for translating between US and international units?