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Are you in the business of international trade or logistics? If so, you may have heard about the new incoterm DPU that is gaining popularity this year. These new incoterms will be in place for the next 10 years and are sure to affect your business, so it’s important to understand what they mean and how they will change the way you do business.
The DPU Incoterm: Delivery at Place Unloaded Explained
One of the key changes in the new incoterms is the introduction of the DPU, which stands for “Delivered at Place Unloaded.” This incoterm specifies that the seller is responsible for delivering the goods to a designated place, and the buyer is responsible for the cost and risk of transporting the goods from that place to their final destination. While you can still use contracts that refer to the DAT (Delivered at Terminal) or DAP (Delivered at Place) incoterms for the time being, it is highly recommended that you switch to the new incoterms for all new contracts with customers and suppliers as of 2020. It’s important to note that the name of the incoterm should be used in conjunction with the term, such as “DPU destination warehouse.” This specifies the place where the goods will be delivered, whether it be a warehouse, port, or other designated location within the destination country.
The Benefits of Using the DPU Incoterm
The DPU incoterm offers a number of benefits for both buyers and sellers. For buyers, the DPU incoterm allows them to take control of the transportation of the goods from the designated place of delivery, which can be more cost-effective and efficient for them. It also allows them to choose the mode of transport that best suits their needs, rather than being limited to the mode chosen by the seller. For sellers, the DPU incoterm simplifies the shipping process and reduces the risk of damage or loss during transport, as they are only responsible for delivering the goods to the designated place.
How to Properly Use the DPU Incoterm in Your Contracts
It’s important to properly use the DPU incoterm in your contracts to ensure that there is no misunderstanding or ambiguity regarding the responsibilities of each party. When using the DPU incoterm in your contracts, be sure to specify the following:
- The designated place of delivery: This should be a specific location that is easily identifiable and accessible, such as a warehouse, terminal, or port.
- Any relevant details about the delivery: For example, you should specify whether the goods will be unloaded from the shipping container or not, and whether the seller is responsible for any customs clearance procedures at the place of delivery.
- The mode of transport: You should specify whether the goods will be transported by land, sea, air, or a combination of modes. This will help to clarify which party is responsible for the transport costs and risk.
Common Misconceptions about the DPU Incoterm
There are a few misconceptions about the DPU incoterm that it is important to address:
- The DPU incoterm does not include insurance: While the DPU incoterm does not explicitly include insurance, it is still recommended that both buyers and sellers purchase appropriate insurance coverage for their goods.
- The DPU incoterm does not cover customs duties: The DPU incoterm does not cover customs duties or taxes that may be applicable at the place of delivery. These costs will be the responsibility of the buyer unless otherwise agreed upon by the parties.
- The DPU incoterm does not specify the mode of transport: As mentioned above, the mode of transport should be specified in the contract when using the DPU incoterm. If no mode is specified, it is generally assumed that the seller has the right to choose the most appropriate mode based on the circumstances.
The DPU Incoterm in Practice: A Real-Life Example
To better understand how the DPU incoterm works in practice, let’s consider a real-life example.
Suppose a seller in China agrees to sell a shipment of electronics to a buyer in the United States using the DPU incoterm. The seller is responsible for exporting the goods from China and delivering them to a designated warehouse in the United States. The buyer is responsible for paying the cost of transporting the goods from the warehouse to their final destination, as well as any customs duties or taxes that may be applicable.
Once the goods have been delivered to the warehouse in the United States, the buyer arranges for a transportation company to pick up the goods and deliver them to their final destination, which is a distribution center in the Midwest. The buyer pays the transportation company for the cost of transporting the goods from the warehouse to the distribution center, as well as any fees for using the warehouse as a transshipment point.
In this example, the seller has fulfilled their responsibilities under the DPU incoterm by delivering the goods to the designated warehouse in the United States, and the buyer has fulfilled their responsibilities by paying for the cost and risk of transporting the goods from the warehouse to their final destination.
The Responsibilities of the Buyer and Seller Under the DPU Incoterm
Under the DPU incoterm, the seller is responsible for delivering the goods to a designated place, while the buyer is responsible for the cost and risk of transporting the goods from that place to their final destination. This means that the seller is responsible for the following:
- Transporting the goods to the designated place of delivery
- Handing overTransporting the goods to the designated place of delivery
- Handing over the goods to the buyer at the designated place of delivery in the agreed-upon condition
- Obtaining all necessary export documents and completing any necessary export procedures
- Providing the buyer with all relevant documents, such as the bill of lading, commercial invoice, and packing list
The buyer is responsible for the following:
- Transporting the goods from the designated place of delivery to their final destination
- Paying for the use of any third-party terminals or warehouses, if applicable
- Obtaining all necessary import documents and completing any necessary import procedures
- Paying for any customs duties or taxes that may be applicable at the place of delivery
It is important to clearly define the responsibilities of each party in your contracts when using the DPU incoterm to avoid any misunderstandings or disputes.
Key Takeaways
In summary, the DPU incoterm is an important tool for international trade and logistics, as it clearly defines the responsibilities of the buyer and seller in the delivery of goods. By understanding the DPU incoterm and properly using it in your contracts, you can ensure smooth and successful business operations. Some key takeaways to remember when using the DPU incoterm include:
- The seller is responsible for delivering the goods to a designated place, while the buyer is responsible for the cost and risk of transporting the goods from that place to their final destination.
- It is important to specify the designated place of delivery, any relevant details about the delivery, and the mode of transport in your contracts.
- Both buyers and sellers should consider purchasing insurance coverage for their goods.
- The DPU incoterm does not cover customs duties or taxes that may be applicable at the place of delivery. These costs will be the responsibility of the buyer unless otherwise agreed upon by the parties.
Frequently Asked Questions About The DPU Incoterm?
What does DPU stand for?
DPU stands for Delivered at Place Unloaded.
What does the DPU incoterm specify?
The DPU incoterm specifies that the seller is responsible for delivering the goods to a designated place, and the buyer is responsible for the cost and risk of transporting the goods from that place to their final destination.
Can the DPU incoterm be used for all modes of transport?
Yes, the DPU incoterm can be used for any mode of transport, including land, sea, and air.
Does the DPU incoterm include insurance?
No, the DPU incoterm does not include insurance. It is recommended that both buyers and sellers purchase appropriate insurance coverage for their goods.
Does the DPU incoterm cover customs duties and taxes?
No, the DPU incoterm does not cover customs duties or taxes that may be applicable at the place of delivery. These costs will be the responsibility of the buyer unless otherwise agreed upon by the parties.
Can I use the DPU incoterm for existing contracts?
While you can still use contracts that refer to the DAT (Delivered at Terminal) or DAP (Delivered at Place) incoterms for the time being, it is highly recommended that you switch to the new DPU incoterms for all new contracts with customers and suppliers as of 2020.
What are the main differences between the DPU incoterm and the DAT incoterm?
The main difference between the DPU incoterm and the DAT incoterm is who is responsible for transporting the goods to the port of destination. Under the DPU incoterm, the seller is responsible for transporting the goods to the designated place of delivery.