In today’s business world, swept by the tide of globalization, international logistics has become a crucial hub for enterprises’ cross – border trade activities. Among various logistics models, door – to – door delivery with duty paid has gained much attention due to its convenience. However, it also hides many potential risks. In contrast, the CIF port delivery model demonstrates significant advantages in cost control and rights protection, especially for the transportation of large quantities of goods in less – than – container load (LCL) or full – container load (FCL) shipments. Let’s take a detailed look.​

The Potential Risks and Drawbacks of Door – to – Door Delivery with Duty Paid​

Tax – related Violation Risks: Deceptively Convenient but Dangerously Risky​

The “duty – paid” service in door – to – door delivery with duty paid may seem to spare enterprises from numerous cumbersome tax procedures, but it’s actually a “trap” fraught with risks. Some unethical freight forwarders often resort to illegal means to handle tax matters in pursuit of maximum profits. Under – valuing goods is a common illegal practice. For example, goods with an actual value of ​

100,000mightbedeclaredas50,000, aiming to reduce the customs duties and value – added taxes payable in the destination country. Once detected by the customs, the importer will not only have to pay a large amount of back taxes but may also face fines several times the amount of the back taxes, significantly increasing the costs.​

Tampering with HS codes is another common trick of unscrupulous freight forwarders. Different HS codes correspond to different tax rates. They may change the codes of goods with high tax rates to those with low tax rates for declaration. For instance, an electronic product with a 15% tax rate could be declared as a common daily – use item with a 5% tax rate. Once this behavior is exposed, the importer will not only be liable for tax repayment and fines but also see its customs credit rating affected, and future customs clearances will be subject to stricter inspections.​

Moreover, there are serious hidden dangers in customs clearance with shared tax numbers. Multiple sellers use the same VAT (Value – Added Tax Number) or EORI (Economic Operator Registration and Identification number in the EU) for goods clearance, which makes the ownership of goods ambiguous. When one seller’s goods are seized or investigated by the customs due to tax issues, the goods of other sellers using the same tax number will also be implicated, resulting in the inability to pick up the goods normally and causing significant economic losses.​

Ambiguous Legal Relationships: Difficulties in Defining Responsibilities​

The legal relationship of door – to – door delivery with duty paid is full of disputes, bringing great uncertainty to both buyers and sellers. If a freight forwarder promises to provide “full – process transportation + customs clearance” services, it may be regarded as a carrier in the legal sense and is responsible for the safe delivery of goods. Once problems such as loss, damage, or delay occur during transportation or customs clearance, the freight forwarder should compensate according to the contract. However, some freight forwarders may not be able to afford the huge compensation due to their insufficient strength, making it difficult for both buyers and sellers to recover their losses.​

If a freight forwarder is only responsible for customs declaration, when it is regarded as a freight forwarding relationship, although it only needs to prove that it is not at fault to be exempt from liability, in practice, it’s not easy to prove non – fault. When customs clearance is hindered due to incorrect information in customs declaration documents, it’s very likely that the freight forwarder, the buyer, and the seller will shift the blame, leading to a long – drawn – out legal dispute and consuming a great deal of time and energy.

More seriously, if a freight forwarder evades customs duties through false declarations and the amount involved is large (such as evading over $100,000 in taxes), it may constitute the crime of smuggling and be sentenced to life imprisonment at the maximum. If the seller still cooperates knowing about the illegal operations, it may also be identified as an accomplice, dealing a devastating blow to the enterprise’s reputation and development.​

The Remarkable Advantages of the CIF Port Delivery Model​

Cost Advantages: Transparent Fees and Long – term Controllability​

The cost structure of the CIF port delivery model is clear – cut. The seller bears the cost of goods, domestic transportation fees, international freight, insurance premiums, and export customs clearance fees. The buyer is responsible for import customs clearance fees, customs duties, value – added taxes, and destination port pick – up fees, etc. This clear cost – sharing method eliminates the occurrence of hidden fees. In comparison, although door – to – door delivery with duty paid seems to include all costs in a single price, unethical freight forwarders often charge additional fees for various reasons, such as suddenly increasing customs declaration handling fees or charging document fees, and the final cost will far exceed expectations.​

In the long run, the CIF port delivery model is more conducive to enterprises’ cost control. Under the door – to – door delivery with duty paid model, freight forwarders set aside a high profit margin in their quotes because they assume the responsibilities of customs clearance and tax payment. In the CIF port delivery model, however, the seller can independently choose high – quality transportation companies and insurance companies and reduce transportation and insurance costs through negotiation and cooperation.

For example, large enterprises can obtain more favorable freight rates by signing long – term agreements with transportation companies due to their large cargo volumes. Meanwhile, by choosing cost – effective insurance products according to the characteristics of goods and transportation routes, costs can be further reduced. When the buyer handles import customs clearance and tax payment on its own, it can have a clearer understanding of the cost composition of goods in the destination country, which is convenient for cost accounting and financial planning and improves the enterprise’s operational efficiency.​

Rights Protection: Clear Responsibilities and Strong Guarantees​

For sellers, under the CIF port delivery model, as long as the goods are loaded onto the ship at the port of shipment as stipulated in the contract and the buyer is promptly notified, the delivery obligation is fulfilled. The risk of the goods during transportation is transferred to the buyer from the moment the goods are loaded onto the ship. If the goods are accidentally lost or damaged during transportation, as long as the seller provides documents that meet the contract requirements, it does not need to bear the liability for the loss, and the buyer will file a claim with the insurance company.

In addition, since the seller arranges transportation and insurance independently, it can choose reliable partners, ensuring the safe and timely delivery of goods and maintaining a good cooperative relationship with the buyer as well as its own business reputation.​

Buyers can also enjoy full rights protection under the CIF port delivery model. The insurance purchased by the seller provides a safety net for the buyer. When losses or damages occur during the transportation of goods, the buyer can file a claim with the insurance company.

At the same time, when the buyer is independently responsible for the import customs clearance process, it can choose a familiar or trusted customs clearance agent, strictly control the customs clearance process, and ensure compliance with local laws and regulations, avoiding tax risks and customs clearance delays caused by the illegal operations of freight forwarders. The clear cost composition also helps the buyer with cost accounting and market pricing, enabling it to plan its business strategies rationally.​

In conclusion, in international logistics transportation, the CIF port delivery model has emerged as an excellent choice for enterprises due to its features of greater safety, economic efficiency, and rights protection. Although door – to – door delivery with duty paid has its conveniences, its potential risks are huge and may cause serious losses to enterprises. When conducting international trade, enterprises should choose logistics models carefully and give priority to the CIF port delivery model to ensure the smooth transportation of goods and the stable development of the enterprise.