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4 Methods for Securing Payment on International Exports
International Exports
Operating in a global marketplace puts you in competition with multinationals and local firms. To attract international customers, ensure your offerings are high-quality, diverse, and available at competitive rates with a simple purchasing process.
Exporting to new overseas markets can reduce systemic risk, expand market share, and lower costs. However, it also comes with financial risks, such as non-payment or delayed reimbursement. To counteract these risks, there are several payment mechanisms export firms may use.
Securing Your Payment on International Exports
Payment in Advance
This is perhaps the most secure method of conducting export operations. Instead of dedicating resources to debt collection, your firm can ensure payment by sending an advance receipt to your buyer. After approval, the buyer can pay by wire transfer, draft mail, or credit card. However, mailed checks can cause delays of 4-6 weeks, undermining the benefit of advance payment.
Buyers rarely use this method due to the risks it poses. The buyer can’t inspect the goods or confirm payment before they arrive. In such cases, sourcing locally might be better, potentially losing your competitive edge.
Letters of Credit
This method of payment offers security to both parties and is perhaps the most common mechanism for export payments. The importing party arranges for their bank to guarantee payment on their behalf, as long as they meet all contract terms. If the bank is reputable, this method ensures the buyer’s credibility. It also assures the buyer that they will receive the products they agreed to buy.
Documentary Drafts
In this situation a bank will serve as an intermediary on behalf of the exporter, coordinating the exchange process. The bank will hold the necessary ownership documentation entitling the buyer to take possession of the goods, only completing the transfer when the buyer has fulfilled their obligation as negotiated. The documentary draft, or bill of exchange, requires both the importer and the exporter to sign it, promising payment of a specified amount upon delivery by a certain date. The bill guarantees that payment will be made no matter what underlying disputes and negotiations take place. In this situation, the bank handles all collections, and the buyer makes payment directly to the bank, which hands over necessary titles once the transaction is completed. Explore further by checking out 5 Tips for New Importers and Exporters
Open Account
Where the exporter has strong assurances about the credibility of the buyer, and their ability to pay on time, they may ship goods without issuing any sort of negotiable instrument that states the buyer’s legal obligation to pay a certain amount at a certain date. Under this payment method ownership of the goods passes to the buyer before payment is made, subjecting exporters to the full risk of defaulted payment. Without any documentation or financial intermediaries involved, it can be very difficult to pursue payment claims in foreign countries. This method also poses significant financing risk, as few banks will be willing to finance a transaction where payment cannot be legally guaranteed.
However, if you carry out all necessary research on the importing party, and can prove a strong track record of payment and a good international reputation, then this method of payment can provide you with a vital advantage over competing companies both locally and internationally.
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4 Core Risks in the Global Supply Chain
As technology and business advance, customers and suppliers are accessing foreign markets previously out of reach. Companies now face global competition and unexpected disruptions that didn’t concern a decade ago.
The supply chain, often overlooked, is highly vulnerable to economic upheaval and shifting customer demands. As a crucial component of a company’s operation, managers need to identify, quantify, and mitigate risks. A recent Chartered Institute of Procurement and Supply (CIPS) study reveals that global supply chain risk is at its highest since 2013, driven by economic and environmental instability worldwide.
The Main Key Factors Affecting The Global Supply Chain:
Economic Risks
These vulnerabilities reflect a diverse set of global challenges facing companies. The effects of economic slowdown and political upheaval are particularly impactful on the supply chain. As currency fluctuations, instability in demand and prices, changing labor costs, and inflationary pressures make it impossible for firms to accurately plan their investment in foreign markets.
For many companies, this means they must instead opt for a shorter and simpler supply chain. If outside procurement is necessary, companies must keep close communications with suppliers to ensure they are flexible enough to monitor, and quickly react to changes in the market.
Environmental Risk
These risks can be both internal and external. Natural disasters and other extreme weather conditions comprise the bulk of external environmental risks companies will face. Earthquakes, floods, storms, and tornadoes can close airports, docks, and roads, delaying shipments and disrupting travel and communication.
Internal risks can arise from improper health and safety and goods management procedures. These can cause fires, spills, chemical leaks, and other environmental hazards that result in the shutdown of storage or shipping facilities.
While weather conditions are unpredictable, you can develop reaction plans and guidelines for suppliers to handle disruptions. Ensure strong communication systems are in place and that contracts address potential delays from environmental factors.
Political Risk
Terrorism, government policy changes, systematic corruption, and energy crises. These are just some of the geopolitical issues facing firms that operate in the international marketplace. If a country pulls out of a mutually beneficial trade deal or starts to pursue protectionist policies it can severely affect the terms of your international dealings. While the possibility of expensive shipments being commandeered, or a delivery channel being closed due to security threats is also a very real possibility.
Companies must be aware of the political trends in the country they are receiving supply from. Technology can be used to develop an overall picture of possible risks, while certain insurance policies will cover companies against the threat of embargoes or canceled licenses. It may be necessary to establish an on-ground presence through an IOR or EOR to ensure the delivery of goods at agreed prices.
Supplier Risk
Outsourcing crucial operations exposes you to risks like inaccurate shipments, poor communication, and potential supplier insolvency. Conduct thorough screening and regular assessments of suppliers to ensure compliance and reliable delivery. Collaborate to identify and mitigate potential risks.
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4 steps to boost productivity and efficiency in warehouse operations
Warehouse management is one of the most critical functions in any inventory-heavy industry. From planning for labor and equipment, to scheduling incoming and outgoing shipments, to, arranging and tracking the goods received; managing the complex processes of a warehouse is no simple task. Nevertheless, 46% of small to medium-sized businesses still lack a formal, automated method for tracking and managing inventory and just 20% of small businesses are currently taking advantage of inventory management software.
Thankfully, improving the management and shipment of inventory is not as difficult as it seems. Here are a few simple steps any company can take to tighten up its warehouse operations
Make Better Use of Floor Space
Instead of investing in expansion, or additional premises, free up additional yardage by improving your warehouse layout. Use storage spaces that are taller rather than wider, solutions such as pallet racking will optimize your use of vertical space. Store all similar items together, in a systematic order. Group items with a shorter shelf-life together, assign small items to appropriate storage spaces, and keep items of the same type in one area. This approach will reduce spoilage, minimize loss of goods, and maximize the use of existing space. Ship out any goods that do not need local storage. By using only the space you need, you can reduce storage, maintenance, and security costs.
Invest in Technology
Today, companies without an up-to-date Warehouse Management System (WMS) miss out on key opportunities. A WMS schedules staffing tracks goods via barcodes, and plans maintenance routes. It monitors performance metrics like shipping costs, error rates, and returns, enabling continuous improvements in critical areas.
Improve Labor Productivity
The workforce is often the most cost-intensive area of warehouse operation. Managers must emphasize key KPIs and integrate continuous improvement into warehouse culture. Encourage feedback from pick-and-pack workers to boost efficiency, and act on suggestions to enhance engagement. Provide training for supervisors to understand vendor, customer, and inventory needs. Use incentive pay to link efficiency with compensation and set competitive, achievable targets.
Vendor Compliance Policies
Your new focus on tracking performance metrics should include an examination of vendor deliveries.
- Are vendors delivering goods earlier or later than promised?
- Are the goods that are being received of the correct quality?
- Are they properly packaged?
- Are barcodes properly attached, and goods properly labeled?
It’s important that vendors are aware of the expectations for delivery and that processes are in place for dealing with continued non-compliance. Present metrics showing deficiencies in timing or quality of delivery to vendors, allowing them to make necessary adjustments. Pursuing this policy will reduce holding costs, increase delivery times, and ensure customers are receiving proper quality goods.
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E-Commerce Growth Drives Rising Fulfillment Costs for Retailers
Online retail is booming, global e-commerce revenue is projected to hit $6.3 trillion in 2024, a significant 8.76% jump from the previous year.
As more and more customers move online, everyone from brick-and-mortar chains to virtual stores is finding it necessary to optimize. From website interfaces to warehouses and carriers, supply systems are being updated to meet evolving global customer demands.
With shipping costs often reaching 25% of business expenses, services like FedEx, UPS, and USPS are keen to capture their share. According to EKN Research, 18 percent of every dollar gained through online sales goes towards fulfillment costs. As rates rise, businesses need innovative solutions to lower fulfillment costs.
Customers Expect More with E-Commerce
In large part, these costs are being driven by E-commerce behemoths such as Amazon and Walmart. Both companies vie for the best rates, with Wal-Mart offering free two-day shipping on orders under $35. Amazon has matched these rates and also offers free two-day shipping on all items to subscribed Prime members. Explore further by checking out Deliver Imports to Amazon FBA
With more customers flocking to these sites, other retailers are also offering similar incentives despite the cost. For smaller businesses, however, dealing with these costs while remaining profitable is a difficult ask.
Strategies to Manage Fulfillment Costs with E-Commerce
Match Carriers to Customer Requirements and Business Objectives
Use data and analytics tools to identify customers that form the most profitable market for your offerings. Align your fulfillment systems to meet their needs; same-day or two-day delivery may not be necessary. Once you identify your key market, optimize your supply chain and shipment network to reduce costs.
Stay Lean
Many businesses make the mistake of keeping excess inventory at distribution centers to compensate for demand fluctuations. Stock-outs can damage your reputation and increase last-minute supply costs, while excess inventory has its drawbacks. It drives up operational expenses including labor and equipment costs to account for the increased load. Rather a balance must be struck between holding too little, and too much stock.
Companies should invest in scalable workforce and storage solutions to handle demand fluctuations. Enlisting demand planning experts to analyze trends and market data can ensure effective workforce planning.
Get Your Packaging Right
Shipping carriers want your packages to be compact and heavy, and they prefer them to be delivered to destinations that are already part of their delivery routes. Unfortunately, online retailers often ship to incredibly diverse geographic locations, and because items can differ so greatly; packaging is often inconsistent too. Because of these issues carriers now charge based on dimension, as well as weight.
Instead of boxes, see if you can deliver your goods safely using plastic or paper bags; as many fashion retailers are doing. If you have to use boxes try and opt for corrugated ones, rather than more costly inserts. Make sure that you have multiple-sized boxes to fit the requirements of your product; ungainly oversized boxes will bring unnecessary shipping expenses. This may entail investment in customized boxes, especially if you have a unique and varied product range, however, the ultimate savings you’ll get will more than compensate for the up-front investment.
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Is Drone Delivery Changing the Future of the Shipping Industry?
Drone Delivery
Drone shipments worldwide totaled 2.4 million units in 2023, and are projected to exceed 3.1 million units per year by the close of 2025. so you can imagine the drone delivery industry shortly due to the great solutions that can be presented.
Companies like: Amazon, Google, Wal-Mart, FedEx and UPS are all seriously investing in drone technology.
For many logistics providers, it’s clear that drone technology can be properly regulated. the opportunities to cut costs and speed transportation are huge.
Here are just some of the reasons why the business world is excited, by the possibilities of drone delivery:
Resolving the Last Mile by Drone Delivery
The last mile of delivery between the warehouse and the customer is often the most cost-intensive. Planning labor requirements and routes to ensure as many packages arrive at their destinations, as quickly as possible can be a logistical nightmare.
Drones can ensure each delivery, is carried out safely and quickly to the correct address, securing high levels of customer satisfaction even as costs are reduced.
Improving the Supply Chain by drone delivery
Drones are being used to deliver raw materials from mining sites to processors, such as:
- Camera-equipped drones are being used for surveillance in company warehouses.
- Other machines are being used to aid maintenance.
- Repair efforts by transporting tools, and parts to remote factory sites or offshore rigs.
- Over the next 5 years, the use of drones for inspection, delivery, surveillance, and basic tasks is expected to explode.
Obstacles to Overcome by drone delivery
For many experts, however, there are still some major challenges, to be navigated before drone technology becomes a basic part of business operations, such as:
- Drones are still relatively lightweight and can handle short flight durations of 15-30 minute flights with 10-15 pound payloads.
- Drones also still represent an expensive investment for many companies, while promises of savings are great in theory.
- Dealing with the air traffic requirements of controlling flying objects.
To know more about drone delivery, you can contact GCE.
Source: Drone Delivery
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The Global Logistical Challenges of Online Retail
Online Retail
It’s undeniable — in the last couple of years, Online Retail has gone worldwide. In 2017, depressed oil prices lowered retail sales for brick-and-mortar stores, while online retailers saw a 27% revenue growth, reaching nearly $2 trillion in sales. With established markets like North America already part of this digital revolution, Asia-Pacific and in particular China also became major players in the Online Retail market more recently. As the middle class across these developing regions expands, and internet penetration grows, increasingly consumers and businesses are looking to global markets to source their need for electronics, fashions, and communications.
Explore more about IOR Service in Hong Kong China
With increased interest comes greater expectations. Empowered customers now demand quick delivery, accuracy, quality, and easy returns from their retail experience. Fulfilling these requirements in the international market places unique technical and logistical challenges on any online retailer. Here are some of the issues they face.
Flexibility
Product Ranges
Global online retailers like Amazon and Alibaba handle a diverse range of products, from small electronics to heavy packages over 50 kg. Their logistics system or third-party provider must handle this variety without consigning goods to the non-conveyable category. This is vital for driving efficiency and reducing costs.
Scalability
Online retailers constantly deal with fluctuating order volumes and a changing mix of products in each shipment. Online retailers must create scalable logistics systems that can quickly adapt to varying capacity needs, with planned processes, system flows, and staffing requirements. A system that only runs efficiently at full capacity will be ineffective during low volumes, so accounting for downtime and overcapacity is essential.
Developing Markets
Asia-Pacific and Africa are becoming key players in e-commerce supply and retail, but sourcing from and shipping to developing nations involves risks.
Read more about E-commerce Fulfillment Costs
Payment Options
Payment options in these markets are often limited; instead of credit and debit cards, customers will pay via cash-on-delivery or mobile money. Integrating multiple local payment options into existing services can be difficult. Payments that are made will be in local currency and systems must account for payment in multiple currencies.
Poor Infrastructure
Many of these countries have poor transport networks. Roads are often poorly constructed or maintained, and major routes are often subject to extreme traffic volumes creating costly bottlenecks and unavoidable delivery delays. Warehouses may also be inadequate for large shipments, with a lack of automated tracking, below-standard storage facilities, and inadequate monitoring and controls.
These issues will often result in inaccurate or botched deliveries, and in worst-case scenarios cause deliveries to fail altogether. For example, if customers are not available to sign for packages or if they have provided incorrect addresses, in some cases retailers may ask customers to pick up packages from a central shipping hub to reduce these failures, however, this does adversely affect the customer experience.
What is the meaning of Countervailing Duties CVDs?
The World Trade Organization (WTO) allows its member countries to impose countervailing duties (CVDs) to mitigate the negative impact that certain imports can have on domestic industries.
At GCE Logistics, our team, specializing in Exporter of Record services, understands the ins and outs of how CVDs are implemented across different countries. In this post, we’ll give you a quick overview of what CVDs are and how they work.
What is Meant by Countervailing Duties CVDs?
Countervailing Duties (CVDs) apply to specific goods listed in the Foreign Trade Policy. Authorities impose these duties to mitigate the negative impact on domestic manufacturers producing the same product. The duty amount depends on the export subsidy the exporter receives from their local government.
Provisions regarding Countervailing Duties CVDs are contained in the WTO’s Agreement on Subsidies and Countervailing Measures, which is a part of the General Agreement on Tariffs and Trade (GATT). It explains both the situations in which subsidies are permitted and the measures countries can implement to mitigate their negative effects.
The countermeasures allowed by the WTO include:
- Using the dispute settlement procedure of WTO to obtain the withdrawal of subsidies.
- Imposing CVDs on the subsidized imports to protect the domestic industry.
Countervailing Duties CVDs help balance out the price, thereby protecting the interests of the domestic manufacturers. Without CVDs, the economic growth of the importing country could suffer. Imposing CVDs helps make local products equally competitive with imported goods. It trumps the advantage gained by the exporting company due to receiving local subsidies.
How GCE can help in Countervailing Duties
Importing countries impose Countervailing Duties (CVDs) on subsidized goods. Companies exporting these products must pay the duties to the government. The WTO permits these duties only after the importing country has conducted a thorough investigation into the subsidized products. Detailed rules exist for determining whether goods are subsidized and for calculating the CVDs. Once determined, CVDs remain in effect for five years; subsequently, another investigation assesses and recalculates the subsidies.
GCE Logistics is a reliable provider of the importer of record IOR and exporter of record EOR services in the Middle East.
Our team has extensive knowledge of import and export rules and regulations in various countries. We provide an affordable solution for companies that cannot establish a direct presence in the country where they import goods. If you want to learn more about our IOR/EOR services.
Source: IORservice.com
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How to Deliver Imports to Amazon FBA IOR from Abroad?
Fulfillment by Amazon (FBA) IOR is one of the most advanced fulfillment networks in the world because your business can greatly benefit from selling goods through this platform. With FBA, you don’t need to set up your distribution center.
Amazon will collect, pack, and ship the products to the consumers. therefore the best part about FBA is that you can easily scale up your business as your sales increase over time.
In this post, we will explore the role of an Exporter of Record (EOR), such as GCE Logistics, for companies sending goods to an Amazon fulfillment center. We aim to inform you about how the EOR manages the shipment of your goods to a fulfillment center in the US and introduce the Amazon Importer of Record (Amazon IOR) service, which is now available.
The Role of EOR in Shipping Goods to Amazon Fulfillment Centers
Any company that wants to send goods to the Amazon fulfillment center must hire an importer of record (IOR). because Amazon will not act as an EOR for any goods that are sent to the fulfillment center. This is applicable for shipment of goods of any value or size. If you do not hire an EOR, therefore your goods may be refused or returned.
An EOR is responsible for all aspects of the export process. Some of the responsibilities of an EOR include the following.
- Make sure that the exported goods conform to local rules and regulations
- Pay duties, fees, and taxes on goods, if applicable
- Answer all possible queries from the US Customs and Border Control
- Obtain and fill export documents
- Take legal responsibility for nonconformance to local rules
- Keep detailed records of supporting documents
If you are exporting goods that are not permitted or included in the restricted item list, therefore the EOR will get the required authorizations or permits. Some of the items that are on the restricted or prohibited list include certain alcohol, medications, agricultural products, plants and seeds, and wildlife products.
What Does Our E-Commerce Amazon IOR Importer of Record Service Include?
- Complete documentation and compliance checks
- Acquisition of import permits and licensing
- Clearing of shipment through relevant customs authorities
- Payment of all customs clearance charges and levies on your behalf
- We carry out the last-mile delivery to the final consumer
- Periodic reporting on shipment status
- Warehousing and storage solutions
- Temporary imports/temporary exports through third countries
- Management of your products through customs procedures
Final Remarks
An EOR can play an invaluable role when it comes to sending goods to the Amazon fulfillment center.
the export agent will act as your representative in the US. You won’t have to deal with the legal requirements regarding exporting the goods. The agent will take care of it for you.
Keep in mind that Amazon is not responsible for any taxes, duties, and fees that are levied on the goods stored in the FBA inventory. Any shipment that arrives at the fulfillment center with customs duties due will be sent back to you. That’s why you must hire an EOR to take care of all the monetary obligations regarding the shipped products.
At GCE Logistics, we have a team of expert professionals who can take care of all your export needs. To talk to one of our Amazon IOR Experts, or Get a Quote from an E-Commerce IOR Importer of Record Service
Source: IORservice.com
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What is the Meaning of the Incoterm DDP?
The parties involved in foreign trade need to pay as much attention to the terms of the sales contract as to the sales price. To reduce confusion about terms used in international sales contracts, most countries have adopted a set of international trade terms known as the International Commercial Terms, or Incoterms.
If you are new to cross-border trade, starting with the language of Incoterms will help you understand what each term means for your costs, risks, and compliance obligations before signing any sales contract. Incoterms clarify the risks and responsibilities of sellers and buyers that relate to the transit of goods from one place to another. One Incoterm that is important for parties to an international trade to know is Delivered Duty Paid (DDP).
What is DDP?
DDP — Delivered Duty Paid — refers to a contract whereby the seller is responsible for the total costs associated with transporting goods to the buyer’s destination. The seller bears all costs and risks from the point of origin until the goods are received by the buyer, including export clearance, freight, insurance, import duties, and customs clearance in the destination country.
Under DDP, the seller carries maximum obligation. It is the most seller-heavy of all Incoterms — the opposite of EXW (Ex Works), where the buyer assumes all responsibility from the seller’s door. DDP is governed by the Incoterms 2020 rules published by the International Chamber of Commerce and applies to all modes of transport.
Who Pays Duties Under DDP?
Under DDP, the seller pays all duties — including import duties, export duties, VAT, and any other taxes or charges levied at the destination. This is the defining feature of DDP and what separates it from DAP (Delivered at Place), where the buyer pays import duties.
The seller’s full financial obligations under DDP include:
- Export packaging
- Export clearance and export duties
- International freight costs
- Insurance during transit
- All destination taxes, VAT, and any applicable countervailing duties (CVDs)
- Customs clearance costs at the destination
- Arrange for key freight documents, including proof of delivery, commercial invoice, packing list, and customs entry at the destination
- Last-mile delivery to the named destination
The buyer’s only obligation under DDP is to receive the goods at the agreed destination. All compliance, cost, and risk sit with the seller until that point.
DDP vs DAP vs DDU — What is the Difference?
These three terms are the most commonly confused in international trade. Here is a direct comparison:
| DDP | DAP | DDU | |
|---|---|---|---|
| Full name | Delivered Duty Paid | Delivered at the place | Delivered Duty Unpaid (removed in Incoterms 2020 — replaced by DAP) |
| Who pays import duty | Seller | Buyer | Buyer |
| Who clears customs at the destination | Seller | Buyer | Buyer |
| Who pays VAT at the destination | Seller | Buyer | Buyer |
| Risk transfer point | Named destination | Named destination | Named destination |
| Seller obligation | Maximum | High | High |
| Best for | Buyers who want zero customs involvement | Buyers who prefer to handle local duties | Not used in Incoterms 2020 |
Key practical difference between DDP and DAP: Under DAP, the goods arrive at the destination, but the buyer must handle import clearance and pay all duties before taking delivery. Under DDP, the goods arrive fully cleared and duty-paid — the buyer simply receives them. For buyers in countries with complex customs procedures, DDP significantly reduces their administrative burden.
Note on DDU: DDU was removed from Incoterms 2010 and does not appear in Incoterms 2020. If a contract still references DDU, it should be updated to DAP or DDP, depending on who the parties intend to bear the duty obligation.
When to Use DDP
DDP is the right choice in the following situations:
Use DDP when:
- Your buyer has no customs expertise or local entity in the destination country and cannot act as the importer of record
- You are selling to end consumers or businesses in markets where customs clearance is complex or where your buyer has no experience
- You want to offer a fully landed, duty-paid price that makes your offer simpler and more competitive
- You are shipping to countries with high or unpredictable import duties and want to control the total cost
- Your buyer is specifically requesting DDP terms to simplify their procurement process
Avoid DDP when:
- You have no local presence, registered entity, or IOR service in the destination country — without one, you cannot legally act as importer of record
- The destination country restricts foreign entities from acting as the importer of record
- Import duties and VAT at destination are the buyer’s preference to manage (in which case, use DAP)
- The cost and administrative burden of destination customs compliance outweigh the commercial benefit of offering DDP terms
The IOR Role in DDP Shipments
This is where most DDP shipments run into problems. Under DDP, the seller is responsible for customs clearance and duty payment at the destination — but in most countries, only a locally registered entity can act as the official Importer of Record (IOR) with the customs authority.
If you are a foreign seller offering DDP terms into a market where you have no local office or customs accreditation, you cannot legally file the import entry yourself. Without an IOR, your shipment will be held at the border. The DDP benefits for importers are only realized when the seller has a proper IOR arrangement in place at the destination.
The solution is to appoint an Importer of Record service who acts as the legal importer on your behalf — filing customs declarations, paying duties, and ensuring compliance with local import regulations, all while you retain commercial ownership of the goods.
How IOR works within a DDP shipment:
- Seller books freight and prepares export documentation at the origin
- IOR provider is appointed as the legally responsible importer at the destination
- Goods arrive at destination port — IOR files the customs entry, pays duties, and VAT
- Customs releases the shipment to the IOR
- IOR coordinates last-mile delivery to the buyer’s address
- Ownership transfers to the buyer on receipt
Understanding IOR customs responsibilities is essential for any seller offering DDP terms — particularly in countries where foreign entities face restrictions on acting as importer of record.
Final Thoughts
DDP is an important Incoterm that must be clearly understood by both the buyer and the seller. Before sending DDP shipments, the seller must know the destination country’s legal requirements — customs requirements in foreign countries are complex, and not knowing the local process for clearing goods can result in delays and penalties. That is why working with experienced freight forwarding services alongside a qualified IOR is the most reliable way to execute DDP terms in any market.
By partnering with GCE Logistics, you can avoid the complications of international trade and leverage decades of expertise to address a wide range of trade-related issues. We offer cross-border shipping, project handling, warehousing and distribution, DDP customs clearance, land freight, and air freight.
Frequently Asked Questions
Who is responsible for customs clearance under DDP?
The seller. Under DDP, the seller must arrange and pay for customs clearance at the destination country. In practice, this is handled by an Importer of Record (IOR) service appointed by the seller, since most countries require a locally registered entity to file customs declarations.
Can a foreign seller offer DDP terms without a local entity?
Yes, but only by appointing a third-party IOR service provider in the destination country. The IOR acts as the legally registered importer, files customs declarations, and pays duties on behalf of the seller. Without an IOR, a foreign seller cannot legally complete a DDP shipment.
What costs does the seller pay under DDP?
The seller pays all costs: export packaging, export duties, international freight, insurance, import duties, VAT, customs clearance fees, and last-mile delivery to the named destination. Countervailing duties (CVDs) and, where applicable, anti-dumping duties are also the seller’s responsibility under DDP.
Is DDP available for all modes of transport?
Yes. Unlike some Incoterms such as FOB and CIF, which are sea-freight specific, DDP applies to all modes of transport — sea, air, road, and rail.
What is the difference between DDP and DDU?
DDU (Delivered Duty Unpaid) was removed from Incoterms 2010 and is not included in Incoterms 2020. Under DDU, the seller delivered goods to the destination, but the buyer paid import duties — essentially the same as today’s DAP. If a contract references DDU, it should be updated to DAP or DDP depending on the agreed duty obligation.
What Does DEQ Mean in International Sales Contracts?
DEG: Delivered Ex Quay
When it comes to international trade, many terms can cause confusion resulting in undesirable practical consequences. One such term that we will discuss in this article is delivered ex quay or DEQ. After reading this article, you will have a thorough understanding of the term in the context of international sales contracts.
DEQ: An Overview
Delivered ex quay (DEQ) is a term that is used in international trade. It is a contract specification that specifies that the seller will be responsible for delivering products to the wharf. DEQ may be recorded as either duty paid or unpaid. In case the DEQ is marked as duty paid, the seller must pay customs duty and taxes associated with the goods. For DEQ unpaid, the buyer will be responsible for paying the duties and other associated costs.
Delivered ex-quay can be used only if the seller is directly or indirectly able to get an import license. Also, the term is applicable for inland or sea waterway transport.
Understanding Delivered Ex Quay — DEQ
With a DEQ contract, the seller is responsible for the provision of goods and other required conformity evidence. The seller must fulfill all the legal formalities that are required for transporting the goods to the quay at the port of destination mentioned in the contract. The seller needs to obtain authorization documents that are required for the transit of goods. The goods must be transported to the agreed destination on the date mentioned in the contract.
With a DEQ contract, all risks related to the goods are borne by the seller. The risks that include damage to and loss of goods are borne by the seller until the goods are delivered to the intended destination.
The seller is also required to provide notice to the buyer about the time of arrival of the goods. Moreover, the seller must provide any other notices that are required for the buyer to take measures to receive the goods from the port. The seller must provide the buyer with a delivery order and other necessary transport documents that will enable the buyer to take goods held at the quay, including a non-negotiable sea waybill, a negotiable bill of landing, a multimodal transport document, and an inland waterway document.
Conclusion
DEQ is an important term that relates to the international sales contract. The seller bears all expenses that relate to the transfer of goods to the quay. All the legal formalities required for transporting the goods to the wharf at the port destination must be fulfilled by the seller.
GCE Logistics offers comprehensive services relating to global forwarding and logistics. We can act as an importer of records helping companies in fulfilling all the legal formalities involved in international trade.
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