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DDP VS CIF (Full Guide)

DDP VS CIF (Full Guide)

Providing products for business is one of the most significant challenges for all businessmen and businesswomen. You may go to different countries, such as China, ordering the best products. 

Then, it is time to ship them. It is expected you to know different professional terms used in the field of shipping service. It helps you to choose the most suitable one. 

This article aims to talk about “DDP VS CIF.” After finishing this article, you will have enough information to decide. 

What are incoterms?

Before we talk about DDP VS CIF, it is better to be familiar with incoterms. The “International Chamber of Commerce” firstly designed it. 

This term is used to distinguish costs and responsibilities between sellers and buyers. This term also covers matters such as the following:

  • Transportation of goods
  • Clearance of goods
  • Importing and exporting of goods
  • Who is responsible for payment 
  • Who is responsible for the risk of moving and transferring goods at different stages

And other matters related to freight forwarding from sellers to buyers.

By this definition, we can say that this term is about all international trading rules for selling and transporting goods. 

When you want to import or export, you need to refer to these rules.

DDP VS CIF

In DDP VS CIF, it is necessary to know each term well; they are as follows:

DDP is:

  • Delivered Duty Paid

It means that:

  • The Seller clears the goods for import, and at the designated place in the destination, the goods are ready to be unloaded and delivered to the buyer on the means of transport. 
  • The Seller assumes all costs and risks related to bringing the goods to the designated destination. He is responsible for the clearance of goods for export and the import clearance of goods and the payment of any export and import duties and all customs formalities. It is the responsibility of the Seller.

CIF is the abbreviation for “Cost, Insurance and Freight.” Now, it is time to talk about DDP VS CIF.

DDP

In DDP VS CIF, we talk about DDP at first.

 

The Seller’s task in DDP, for DDP VS CIF

DDP considers the maximum duty for the Seller, and it is essential in the DDP VS CIF discussion. 

The task of the Seller in this term is as below:

  • The Seller must prepare the goods and the business list under the contract of sale and any other proof of conformity required by the contract.
  • Depending on the case, the Seller must, at her/his own expense and risk, obtain any import and export licenses or other official permits and perform all necessary customs formalities for the export of goods and their transport through any country for import.
  • The Seller must deliver the goods to the buyer on the means of transport, ready to be unloaded at the agreed point, if any, at the designated place of destination, on the date or within the agreed time limit.
  • The Seller accepts all risks arising from the loss or damage.
  • The Seller must pay all costs relating to the goods up to the time of delivery and any cost of unloading the goods at the place specified in the destination according to the contract of carriage; and depending on the case, the costs of customs formalities required for the export and import of goods, as well as all duties, taxes and other costs payable on export and import and shipping costs of goods from any country.
  • The Seller must provide any notice required for the buyer to take action to receive the goods.
  • The Seller must carry out those inspection operations (such as quality inspection, measurement, distribution, counting) that are necessary for the delivery of the goods; the Seller must pay the cost of any pre-shipment review ordered by the authorities of the exporting country or importer. 
  • The Seller must pack the goods at his own expense unless, in a particular trade, the goods sold are not packaged typically. 
  • The Seller can pack the goods according to the transport method unless the buyer prepares a specific type of packaging before concluding the sales contract, and he/she must inform the Seller. The packaging must be marked appropriately.
  • The Seller must provide any documents and information, including security information of the goods that the buyer needs to transport to the final destination, or assist him in obtaining them, depending on the case, time, and request of the buyer.

The Buyer task in DDP, in DDP VS CIF

The buyer task in DDP for DDP VS CIF are as below:

  • The buyer must pay the price of the goods in the order provided in the sales contract.
  • Depending on the case, the buyer must assist the Seller in obtaining an entry permit or other official entry permits at the Seller’s request, cost, and risk.
  • The buyer must receive the goods when they are delivered.
  • The buyer accepts all risks from the loss or damage to the goods from when the goods are delivered.
  • The buyer has no obligation to the Seller to pay for any pre-shipment inspection that has been mandated by the authorities of the exporting country and the importing country.

The insurance contract in DDP

When it is the DDP VS CIF discussion, it is necessary to know about each term’s insurance contract. The insurance contract in DDP is as follows:

A) Shipping contract

  • At his own expense, the Seller must enter into a contract for the carriage of goods to the designated place or agreed point. If a specific point is not approved or practically not determined, the Seller can choose the most appropriate point in the designated area or destination for his purpose.

B) Insurance contract

  • The Seller has no obligation to the buyer to conclude an insurance contract. However, at the request, risk, and cost (if any) of the buyer, the Seller must provide the buyer with the necessary information to provide insurance.

CIF

In DDP VS CIF, it may come to the mind that what does the price of CIF mean?!

The exact answer to this question is, “The price paid by the buyer in the port is called the CIF price.”

CIF price is calculated in this way “value of goods + customs cost + shipping to port + THC + bill of lading + port costs + insurance cost + shipping cost to the destination port.”

As you know, the Seller and the buyer have some tasks that may differ in some ways in DDP VS CIF.

The Seller’s task in CIF, for DDP VS CIF

In CIF, the Seller’s tasks are:

  • The Seller’s general duties are that he/she must prepare the goods, inventory, and any other documents under the contract.
  • The Seller concludes an insurance contract for the buyer to cover the risk of loss or damage to the goods during transport. 

The Buyer’s task in CIF, for DDP VS CIF

The buyer’s tasks are:

  • General duties of the buyer is that he/ she must pay the price of the goods in the order provided in the sales contract.
  • The buyer should note that the Seller must only provide the minimum insurance coverage under the term CIF.
  • If the buyer wants more insurance coverage, he must explicitly agree with the Seller to provide the excess insurance.

An insurance contract in CIF

An insurance contract is essential in DDP VS CIF. In CIF, this contract is divided into two parts, as follows:

A) Shipping contract

  • The shipper or the Seller must conclude or prepare a contract for the carriage of goods from the agreed delivery point, if present at the place of delivery to the designated destination or, if approved, to any point in the said port.
  • The contract of carriage must be arranged according to the usual conditions at the Seller’s expense, and the carriage must be of the regular routes used by the ship.

B) Insurance contract

  • At its own expense, the Consignee must provide cargo under the minimum insurance coverage, provided by the Institute and Cargo Insurance (London Insurers Institute), or any insurance coverage with similar conditions.
  • The insurance contract must be concluded by the insurer or a reputable (reputable) insurance company. The buyer or any other person who has an insurance interest in the goods can claim damages directly from the insurer.

Concluding remarks

In this article, we tried to provide all vital information for you to know DDP VS CIF. For more and detailed information, you can consult with professionals in this field. 

DDPCH

Dear customers

If you need an impressive rate and competitive offer for Door to Door Rail and Trucking service from China to European countries, please contact our Sale Team.

What does DDP exactly mean?

In this term, the seller must deliver the goods at his/her own expense and risk to a destination in the import country.

What does CIF exactly mean?

In this term, the seller merely assumes responsibilities for the goods until they reach the port of destination.

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