Written by Leon Chow
China–Australia Freight Forwarding Specialist | Guangzhou Allwin Logistic
Today, a factory complained to me that some of their small clients always prefer them to arrange shipments via DDP. They say these services offer all-in pricing, require no complicated documentation or operational expertise, and no taxes are payable upon arrival in Australia—the freight forwarder handles everything. However, the factory says that recently, these services have been frequently inspected by the Customs, each inspection taking 10-30 days. On one occasion, they were unlucky; the freight forwarder said other customers had packed food in the container without declaring it to customs, resulting in the entire container being detained, and they haven’t heard back for over a month. Furthermore, the delivery lead time has been very unstable lately; even without inspections, the lead time is much slower, and the freight forwarder’s customer service can’t provide any answers. This has angered the clients, who feel the factory is deliberately delaying shipments to profit from the freight difference, and they almost stopped ordering from them.
I hope this article can help you clear about DDP.
First, what is DDP? DDP is an abbreviation for Delivered Duty Paid, which is the trade term with the greatest seller responsibility under Incoterms.
• Division of Responsibility: The seller is responsible for shipping the goods to the designated destination in the importing country, handling import and export customs clearance, and paying all customs duties, value-added tax, and other taxes.
• Transfer of Risk: The risk transfers from the seller to the buyer when the goods are placed at the buyer’s disposal at the designated destination.
• Applicable Mode of Shipping: Applicable to any mode of shipping, including sea, air, land, and multimodal shipping.
For goods shipping from China to Australia, the DDP clause applies. This means the shipper arranges the shipping themselves, and upon arrival in Australia, submits their business license, legal representative’s ID, and letter of attorney to the local customs broker. Customs issues a tax bill and proof of payment based on these documents. The customs broker then pays the customs duties on behalf of the shipper before delivering the goods to the consignee.
However, with increasing small business demand and a more competitive market, some freight forwarders, in order to secure more business, have sought to simplify procedures for their clients, giving rise to the increasingly popular DOOR TO DOOR & TAX-INCLUDED “DDP” service in recent years.
So How to Choose a DDP Shipping Service? What are the main differences between Standard DDP and the DOOR TO DOOR & TAX-INCLUDED “DDP” advertised by freight forwarders in the market?
Standard DDP
1. Export Customs Declaration: Customs declaration is made separately using the actual shipper/consignee’s name;
2. Import Customs Clearance: Customs clearance is made separately using the actual shipper/consignee’s name;
3. Ownership of Goods: Legally, the ownership of the goods belongs to the actual shipper/consignee;
4. Shipping Documents: Bills of lading and related documents issued by a legitimate shipping company/airline/freight forwarding company in the name of the actual shipper/consignee;
DOOR TO DOOR & TAX-INCLUDED “DDP”
1. Export Customs Declaration: Goods are combined with other companies into one shipment, and customs declaration is made using the name of a trading company entrusted by the freight forwarder;
2. Import Customs Clearance: Goods are combined with other companies into one shipment, and customs clearance is made using the name of a trading company entrusted by the freight forwarder;
3. Ownership of Goods: Legally, the ownership of the goods belongs to the trading company entrusted by the freight forwarder;
4. Shipping Documents: No formal shipping-related documents;
Risk Differences:
1. With DOOR TO DOOR & TAX-INCLUDED “DDP”, the actual shipper/consignee does not legally own the goods, making it difficult to clarify legal disputes involving shipping and ownership;
2. With DOOR TO DOOR & TAX-INCLUDED “DDP” means your goods are mixed with other companies’ shipments and declared together. You have no way of knowing what’s inside. If any of the goods involve undeclared, concealed, fake brand, oil, powder, or prohibited items and are seized by customs, your goods will also be implicated and detained.
(Recent news reports have mentioned that Chinese and Australian customs and ABF Dept. have seized large quantities of containers containing cigarettes and vapes mixed with ordinary goods such as furniture, lighting fixtures, and general merchandise, causing many customers to be affected and unable to receive their goods or experience long waiting times.)
3. With DOOR TO DOOR & TAX-INCLUDED “DDP”, mixed goods are declared and cleared together with customs. Some freight forwarders put low value of the goods to earn more profit by evading customs duties, but are eventually caught.
4. With DOOR TO DOOR & TAX-INCLUDED “DDP”, because the actual shipper and consignee are not using their names to declare and pay taxes to customs, it is impossible to obtain relevant import duty payment certificates, making it impossible to apply for tax deductions from the local government in subsequent operations.
As mentioned at the beginning, despite the risks and unstable lead times, some small customers prefer DOOR TO DOOR & TAX-INCLUDED “DDP” compared to traditional shipping because this service simplifies complex document processing, numerous miscellaneous fees, and the need for specialized knowledge.
Allwin Logistic’s solution: compliant, but not complicated.
Allwin Logistic team and our colleagues in Australia identified this problem early in our practical experience and took the following services to help our clients resolve their pain points:
1. We regularly provide clients with shipping trend reports, allowing them to be informed in advance of shipping schedules, freight rates, and other trending information. This enables them to find the most suitable time to place orders and arrange production, saving costs and ensuring timely arrival for their project.
2. From the initial order placement stage, we keep close contact with suppliers to ensure timely production completion. We also book and reserve space in advance based on cargo information and provide clients with a complete and reasonable shipping plan and cost estimate.
3. Before and after ship out, our experienced colleagues will prepare a complete set of customs declaration, clearance, and shipping documents for clients and explain their purpose in detail.
4. Before arrival at port, our Australian team will keep communication with clients to ensure a smooth and efficient customs clearance process.
5. Customs clearance, warehousing, and delivery will be handled by our local team in Australia, providing localized services and ensuring the service level our clients require.
We strive to help our clients complete import and export shipping with the simplest possible barriers, transparent costs, and compliant methods, thereby reducing the risks associated with customs declaration, clearance, shipping, and operations, ensuring timely delivery, and promoting long-term development.
If you have goods that need to be shipped from China to Australia, please feel free to contact our professional team.
GUANGZHOU ALLWIN LOGISTIC CO.,LTD.
Contact: Leon Chow
Email: Leon@allwinlogistic.com
Tel: +8613922291413