DPU, Disadvantages to Seller (Exporter)
Is DPU terms safe for an exporter? Are there any drawbacks affecting a seller when he contracts carriage on DPU basis?
The following content explains about the disadvantages under DPU terms from an exporter’s perspective.
Here are those demerits one by one:
01. One of the main disadvantages for exporter under DPU is that, unlike most of the other delivery rules, under DPU delivery terms, the risks of seller involved in movement of goods is high. In an export import trade, the exporter is liable to deliver goods at named destination of importer at importing country by undertaking local transportation in exporting country, export customs clearance, export port handling, main carriage, on carriage risks and costs in buyer’s country etc.
02. Under DPU terms of delivery, since the importer undertakes import customs clearance costs and risks, the delay in obtaining import license or delay in meeting import government requirements make delay in completing import customs clearance process at buyer’s country. As the on carriage is under the liability of exporter under DPU terms, he has to wait importer to complete import customs clearance process to arrange further movement of on carriage to named destination. This is a drawback for exporter when delivery rules are on DPU basis.
03. Another stumbling block for seller under DPU terms of delivery is that the seller invests more amounts in movement of goods. Except advance payment under sale of goods, the exporter gets back his amount under sale of his goods later as per mutually agreed payment terms,
04. Under DPU rules of delivery in an international business; the exporter should be well conversant with government rules and regulations of exporting country to export his product, the costs and risks involved under export customs clearance. An inexperienced exporter or his freight forwarder may face more difficulty in handling such process results the costs hikes than anticipated. This is a fly in the ointment for exporter when contract of carriage is on DPU terms.
05. Another disadvantage is that if the exporter under DPU terms or his agent fails in proper handling of local transportation under pre carriage, the additional costs may occur which could lead to hike costs than anticipated when contracting.
06. The safety of goods is to be taken care till the named destination place even unloading of goods at destination named place under DPU and the exporter is liable for any damage or loss of goods till delivery of goods to importer under international business. This is another downside for exporter when contracting delivery terms as DPU.
07. Another drawback for exporter when movement of goods are on DPU basis is that if the seller fails to appoint a right freight forwarder, the costs and risks under DPU delivery rules may shoot up thereby, the additional costs and burden for exporter might be met.
Hope you have satisfied with the details about demerits of DPU terms for sellers.
Have you faced any more difficulties when handling DPU delivery terms? Share below your experience under discussion column: