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Incoterms DPU|Essential Guide to Delivered at Place Unloaded

DPU is an international shipping term that defines who is responsible for what in the shipping process and also defines the cost each party is liable to pay. DPU is one of the 11 internationally accepted Incoterms for commercial transactions in international shipping.
Incoterms DPU, Delivered at Place Unloaded

Table of Contents

The Role of DPU in International Trade

DPU has diverse applications in maritime trade, land transportation, and small airfreight parcels. 

However, its application for heavy air freight and container shipments is still yet to be established. 

DPU ensures a smooth trade by delineating the exporter (buyer) and importer (seller) responsibilities and roles. It also ensures a smooth transportation and delivery of goods. 

Once the responsibilities, risks, and costs are outlined in the contract, there are fewer chances of misunderstandings and disputes between the two parties. This is why DPU is a very significant set of rules in International trade.

Both parties can form the contract per their terms while adhering to international trade regulations and industry-wide practices.

Under DPU, the seller must obtain all the paperwork to take possession of the goods and unload them at the agreed destination point.

DPU Incoterm

Incoterms General Table,DDP, FOB, DAP, EXW, CIF, FCA, FAS,CFR, CTP, CIP, DAT

Incoterms, short for international commercial terms, clarify the responsibility and terms of trade for the parties involved in international trade. They define the obligations and responsibilities of the buyer and seller concerning the shipment of goods. 

DPU, or Delivered at Place Unloaded, means the seller has to deliver the goods to the buyer after unloading them from the transport. The delivery is complete only once the goods are unloaded, so the seller bears responsibility and risks up to the point of unloading under DPU.

DPU covers transportation delivery-associated risks and costs relevant to the shipment. 

The seller is responsible for the goods and all the risks and costs for unloading and delivering them to the buyer’s specified location. This location may be a warehouse, freight terminal, depot, or any other area per the buyer’s specifications.

The responsibility and risk are passed on to the buyer as soon as the goods are delivered. 

Historical Context and Evolution of the Term

Incoterms were first introduced in 1936 by the ICC (International Chamber of Commerce) as a standardized set of rules for international trade.

Initially, the terms were specific only to the risk transfer between the buyer and seller. However, over the years, with the changing dynamics of marine trade, the Incoterms have undergone several revisions per the global trade regulations. DPU came about as one of those revisions in 2020.

Before DPU, DAT, or Delivered at Terminal, was used to specify the responsibilities of buyers and sellers in the shipping business. The only concern was that DAT dealt with rules when the delivery was to be made only at the terminal.

As supply chains evolved, the need for amendment arose, which led to the revision of the Incoterms and the introduction of DPU. 

DPU offers flexibility to the buyer, allowing delivery beyond the terminal point.

Seller and Buyer Responsibilities under DPU

Obligations of the Seller: 

  • The packaging of goods
  • Preparing commercial invoices for them
  • Preparing all the necessary documents
  • Marking the goods for export
  • Preparing export licenses 
  • Dealing with all the customs formalities
  • Bear the pre-carriage and main carriage charges 
  • Loading charges
  • Delivering the goods
  • Paying for unloading charges
  • Giving proof of delivery
  • Paying for the cost of pre-shipment inspection.
  • Other charges and duties, and 
  • Terminal handling charges

Obligations of the Buyer

  • Paying for the goods per the sales contract
  • Clearing import customs duties and taxes and other import formalities
  • Bear the cost of import clearance 

If the buyer is unable to accept the goods on the specified date, they themselves will bear all the additional costs incurred on the shipment.

Advantages of Using DPU for Sellers and Buyers

DPU has several benefits for both the buyer and seller. Since everything is streamlined, there are fewer chances of ambiguity and disputes between both parties.

Benefits for the Seller

Once the goods reach the buyer’s destination country, the seller doesn’t have to worry about customs clearance or other formalities.

  • The seller controls unloading, so it’s conducted safely and efficiently.
  • Seller can choose the carrier of their choice, weighing costs, time, and other benefits.
  • Risk transfer is immediate once the goods are unloaded at the buyer’s premises.
  • Seller can offer competitive rates and cost control for the entire transportation process. 

To ensure further smooth processing, the seller must ensure they set the prices in accordance with all the costs incurred up to delivery. The proof of delivery must also be present so there’s no further chance of dispute.

Benefits for the Buyer

For the buyer, DPU makes sense as they don’t have to arrange export customs clearance. Also, they don’t have to deal with any transportation costs, etc., until the time of delivery. 

Plus, since they know the goods are the seller’s responsibility until delivery, they don’t need to arrange insurance to ensure the safety of the shipment. 

  • Buyers only have to pick up the goods once the final delivery has been made to their location.
  • The buyer is informed of the total costs, as mentioned in the contract. There are no hidden charges or expenses.
  • The seller bears all charges related to any loss of goods or damage to the shipment until the point of delivery.

How DPU Differs from Other Incoterms

DPU is quite similar to other Group D Incoterms in that, in all these rules, the seller is responsible for most of the costs and risks related to the goods until they reach the destination point.

Let’s take a look at the key differences between DDP, DAP, and DPU.

DPU vs DDP

Delivered at Place Unloaded (DPU) and Delivered Duty Paid (DDP) differ in a way that:

  • In DDP, the seller pays all duties and taxes relevant to the goods for export and import. In DPU, the seller only pays for export clearance, and all import duties and taxes are the buyer’s responsibility.
  • In DDP, the goods may or may not be unloaded at the destination. Whereas DPU is conditional to the actual unloading of the goods at the buyer’s destination
  • So, the seller is slightly more bound under DDP due to additional customs responsibilities, i.e., import formalities.

DPU vs DAP

In both DAP (Delivered at Place) and DPU the seller is responsible for the goods til they arrive at the destination. Here’s the difference between both, though:

  • In DAP, like DDP, the goods may or may not be unloaded at the destination. But DPU requires the complete unloading for the delivery to be completed.
  • In DPU, the seller is responsible for unloading the goods, whereas in DAP, the buyer is responsible for unloading.
  • Under DAP, the goods may be delivered to even more specified locations, such as the buyer’s premises, a new construction site, etc. In contrast, DPU requires delivery to be made at a place where unloading the goods will be possible.

Scenarios where DPU is Preferred

  1. For instance, MNCs usually prefer DPU when importing goods into foreign markets. Since they have the right expertise and compliance teams to look into all customs regulations and can handle the import process on their own, they find DPU more cost-effective.
  2. Consider another scenario where an e-commerce seller is considering international shipping. The seller will prefer the DPU terms as they offer more transparency and control over the import customs duties and taxes. The customers will, in turn, have a smoother trade with them when they are assured they won’t be overcharged for these duties and taxes.

Conclusion

So, is DPU the right Incoterm for you? Or should you look into other terms for your sales contract? It all depends on different aspects, like how much risk you’re willing to undertake with the goods, your budget limitations, the duties and fees of various ports, etc. 

Once you know the essential responsibilities and benefits of a seller and buyer, you’ll better decide which options work best for your business line.

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