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DDP Shipping Risk When Shipping from China

** Very Important: Always asking your forwarder to list import duties and taxes for DDP shipping quote.

 

DDP shipping: Delivered Duty Paid! For so many Amazon sellers who import products from China, it sounds like a dream come true! Isn’t it good that you can pay a slightly higher price for the product and deliver it to you with all the Taxes and Tariffs paid? It’s perfect! Still is…… Is it?

I’m afraid when it comes to such offers. We always go back to the old truth that if it looks too good to be true? Suppose you want to use Alibaba to import goods from China for sale on Amazon, eBay, or elsewhere. You should read this article very carefully because you are likely to be breaking the law and may face serious problems due to Tax evasion.

Does that sound scary? I agree. Let’s look for all about DDP Incoterms and how you use it and can’t use it in your import business.

As I’ve already said, the DDP shipping represents “paid taxes” which simply means that the seller bears all the goods related to transportation cost from their home to your home, including:

The cost of the product
Export duties/fees
Shipping
Import duties/fees/VAT
Shipping to the specified address

That sounds good, doesn’t it? Yes, it is! This is a convenient way to import goods from abroad without worrying about any problems usually associated with imports from China.

Another huge advantage is that you can eliminate all guesses about the CIF cost of your purchase. The price you pay the supplier is the final price, including the cost of shipping goods in China. This makes profit and loss calculations very easy, especially for Amazon FBA sellers who must consider seller fees and FBA fees to calculate their profit correctly.

At the moment, everything is fine, and there is no sign of an illegal! Yes, DDP shipping is used a lot in global B2B transactions. The problem is that many Chinese suppliers have different understandings of what DDP shipping means, so they use it illegally.

DDP shipping risk when shipping from China

Your suppliers will tell you that they can send you goods through DDP shipping, but in fact, they won’t clear your goods through customs! What happens is that your goods are smuggled into your country without paying all taxes (import duties, fees, and VAT).

They achieve this in a variety of ways:

1) If it is a small package, they can try to pass it through customs by placing a low value on the customs declaration form. If you are arrested by customs and asked for a tax, you must pay the tax.
2) Use the wrong HTS code

I hope this information will open your eyes to U.S. companies that accept DDP shipping when you import from China because in most cases, you will still receive the goods, but you will not have any documentation or evidence that the correct taxes have been paid. This means that you can’t even record this inventory correctly on your books! And if someone checks your books, you’re bound to be in trouble.

Some Chinese suppliers use legitimate DDP shipments. Perhaps they have a contract with the courier/freight company to achieve this goal. Probably, but in that case, they won’t have any problems showing you proof/documents that the correct taxes have been paid on the goods you imported. You will need these for accounting processing.

However, true DDP terms are rarely found on Alibaba.com. An easy way to tell if a vendor isn’t providing true DDP shipping is to look at the price. For example:

If the price of a “normal” mode of transport is $2000, but they give you a DDP shipping $2200, then 100% indicates that this is a risk!

So, what can you do? What is the solution to this problem? Under what circumstances can we still use DPP shipping? Let’s find out…

I suggest buying from Alibaba’s website, completely avoiding DPP delivery.

When you know that more than 99% of suppliers will deceive you in this way, it’s not worth the risk. I’m sure Chinese suppliers won’t even put it in a scam. They think they’re helping you! Just as they keep underestimating small items, the package can pass through customs for free.

Only suppliers and legitimate companies that have a contract with the courier company may use the DDP shipment. These people will be happy to provide you with all documents relating to the taxes paid on your goods.

If you intend to import goods from China, Alibaba or any other website, please follow the simple shipping customs to control the way products are processed through customs:

1) When shipping in small quantities, it is usually a courier company.
2) If the purchase volume is large, you will need to use the air freight or Ocean freight handled by your freight forwarder.

As long as you ask the supplier to write down the correct value on the customs declaration form and get the valid invoice from them showing the value of all goods, the number of customs duties paid, etc., you can definitely choose DDP shipping and successfully clear the goods through customs.

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Can I track my shipment?

Sure thing! There are 3 key milestones:

 

  • Accepted: Your order is accepted by AEB Logistics who will be in contacts with you and your supplier. Once shipment at origin is picked up by AEB – EXW/Ex-work – or delivered by supplier to AEB warehouse – FOB, order status becomes in-transit.
  • In-transit: AEB receives your shipment at origin! Once a ship or plane is booked as early as possible by AEB, an estimated date of delivery to you shall be available. There are more updates as shipment is in transit!
  1. Export Customs: When export customs declaration is completed in origin country.
  2. Export Departure: When shipment leaves from origin country.
  3. Import Entry: When import entry is completed in destination country.
  4. Import Arrival: When shipment arrives in destination country.
  • Delivered: While your shipment is still on the way, an estimated date of delivery to you shall be available. Dedicated team of AEB Logistics keep eyes on daily developments & updating estimated delivery date if needed till you have your shipment in hands physically!

 

These updates are made on daily basis by a dedicated team.

 

For additional updates, you can send a message to your AEB account manager or chat on line.

 

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How to Find the Best Forwarders?

1. Of course PRICE

 

This is a given, but you actually will find that prices among the biggest forwarders will not vary a lot as pricing is relatively transparent for your volume. Here I would steer clear of the smaller forwarders that do quote ridiculous prices for local trucking or warehousing in China.

2. SERVICE

 

Responses and service level is critical. It doesn’t seem like it when you are just concerned with price but the saying goes – “you get what you pay for” does in some ways apply. Make sure the company you work with can do what they say they can do.

3. RECOMMENDATIONS

 

Obviously, if you do find a recommendation from someone in the industry or another business that has used their service.

4. FLEXIBILITY

 

For majority of your shipments, it may be smooth and simple however that will be times that you need a forwarder to be flexible or be able to provide other services. This is when a 3PL (Third Party Logistics Provider) may be of more use. They will have a large enough network to help you with warehousing, trucking, final delivery whereas a forwarder will only be able to assist with your freight.

5. TECHNOLOGY

 

Technology is critical, it means the forwarder or 3PL you are working with is forward thinking. It also means they are lowering transaction costs and trying to automate parts of shipping. This in turn means cost savings that can be passed back to you as a client. Also provides you with more timely updates and systems and processes that are clear and precise.

 

BUT this is nearly non-existent in logistics, so if you find one that does implement this then stick with them!

6. EXECUTION

 

Their ability to execute. This of course you will only know after they have executed. But in general from their size, experience and other clients you can gauge their ability to execute.

7. KNOWLEDGE OF CUSTOMS, TAXES, REGULATIONS

 

Especially if you are doing international cargo and shipments. Customs is something that is very unpredictable. It may not be in the hands of your forwarder but their knowledge in these areas is something you have to rely on. So if they show this then is it definitely an advantage.

8. ABILITY TO HELP YOU GROW

 

You definitely want to grow your business, last thing you want is to babysit a shipper. So if you can see that they can provide all the services that you need NOT just today but also TOMORROW, then this is a big consideration. As your business will not stay as it is today.

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Refer & Earn

We know you are satisfied to services by AEB Logistics, but is it possible for you to share your great experience & earn commission? Sure thing!

How to Refer a friend & Earn 3% Commission

Option#1: Click the “Share by email” button at your AEB dashboard https://aeblogistics.com/my-account/referralprogram/. An email can be sent to your friend after email address is input.

The email includes:
– Your name
– Name of your account manager at AEB Logistics
– A link to sign up at AEB website and how to contact AEB Logistics

The email DOES NOT include:
– Your email address & other contact details

Option#2: Tell your account manager something about your referral such as contact information, business opportunity in place, etc. Your AEB account manager will reach out to your referral even without mentioning your name & try to secure orders.

Congratulations! Once your referral pays, AEB pay 3% of invoice amount as Commission to you via PayPal or Payoneer.