FOB DDP mDDP
If you import products into United States, you might be familiar with common incoterms such as FOB (Free On board) or DDP (Delivery Duty Paid). What is mDDP that some of the big retailers such as Amazon, Walmart and Target are using?
Let’s first start with the basics and then review mDDP.
FOB – Free On Board: Seller loads the products on board (or on ship) and the risk transfers to the buyer (retailer in this case). Let’s review the process steps:
- Retailer places an order with manufacturer/Seller in China or other country and accepts to FOB shipping terms.
- Seller packs the products and brings the container to the port agreed upon. Container is then loaded to the shipping vessel.
- Once containers are loaded, the risk now transfer to the buyer. Buyer is responsible for any loss during the shipping process and also liable for any import duties.
Before, we look at mDDP, let’s also review DDP incoterm.
DDP – Delivery Duty Paid: This is opposite to FOB incoterm. Seller holds all the risk and is responsible for clearing the goods and paying all the import duties as needed by the law. Seller is also responsible for all the transportation costs till the agreed place of delivery. The process steps for DDP (Delivery Duty Paid) are:
- Retailer places an order with manufacturer/Seller in China or other country and accepts to FOB shipping terms.
- Seller is responsible for all the export documentation, permits etc. Seller determines the mode of transportation and has to pay all the costs.
- Seller pays for customs clearance at destination port and all the carrier charges.
- Buyer takes control at an agreed place after clearing the customers.
mDDP – Modified Delivery Duty Paid:
