From Liability Allocation to Cost Control: Practical Divergence Between DDP and COD in Cross-Border Transportation

From Liability Allocation to Cost Control: Practical Divergence Between DDP and COD in Cross-Border Transportation

DDP and COD differ significantly in liability allocation for cross-border transportation, influencing cost control strategies. Under DDP, the seller is responsible for the entire process—transportation, insurance, import clearance—until goods are delivered to the buyer’s specified location. This requires strong logistics integration and international clearance resources, such as close cooperation with professional freight forwarders and customs brokers. The seller must bear all costs, including freight, insurance, duties, and VAT, with complex and hard-to-estimate cost structures.

In contrast, COD sellers only handle transportation and delivery before import, with the buyer assuming import-related responsibilities and costs. The seller needs only to ensure timely delivery to the specified port or border in the importing country, with subsequent clearance and pickup managed by the buyer. In cost control, DDP sellers must accurately calculate all expenses in advance and reserve sufficient profit margins. COD sellers, meanwhile, focus on transportation and capital occupation costs to avoid cash flow strain from delayed payments. For instance, a furniture manufacturer using DDP optimized costs by comparing logistics providers and simplifying clearance with ATA Carnet, while using export credit insurance to mitigate bad debt risks under COD.