由 lltx1822 DDP vs COD: Core Differences in International Trade Terms and Risk Prevention Guide
In international trade, the choice of trade terms directly affects the responsibilities, risks, and costs of both parties. Delivered Duty Paid (DDP) and Cash on Delivery (COD) are two distinct trade terms. A deep understanding of their differences and effective risk prevention are crucial for ensuring smooth trade operations.
Under DDP, the seller assumes all risks and costs of delivering goods to the buyer’s specified destination in the importing country, including handling import customs clearance and paying duties and taxes. This requires the seller to fully control the entire transportation chain and import process. In contrast, COD emphasizes the payment condition, where the buyer pays upon receiving the goods. The seller bears transportation and storage costs before delivery but does not handle import clearance or duties.
In risk prevention, DDP sellers must familiarize themselves with the complex customs policies and tax regulations of the importing country to avoid extra costs from clearance delays or miscalculated duties. COD sellers, however, face the risk of payment defaults or delays if buyers reject the goods. For example, a Chinese electronics manufacturer using DDP for exports to Europe underestimated new EU environmental taxes, increasing costs significantly. Another clothing enterprise using COD for Southeast Asian exports suffered losses when buyers refused payment due to alleged quality issues. Thus, enterprises should choose trade terms carefully based on their capabilities and market knowledge, and develop corresponding risk plans.