Merits to seller when he contracts DPU terms of delivery
This information is one of the posts analyzing the pros and cons for exporters and importers when agreeing contract of carriage under each delivery terms specified by Incoterms 2020 published by International Chamber of Commerce.
The below details explains about the merits to an exporter who contracts DPU delivery terms for movement of goods with his supplier. Let us dig those advantages under DPU from seller’s perspective one by one below:
01. One of the advantages under DPU for exporter is that the exporter under DPU delivery rules takes care of the entire process of movement of goods including unloading of goods at destination named place of importer. So the safety of goods can be ensured by the seller which helps him to build up a good business relationship with the buyer.
02. Compared to most of the delivery terms, under DPU, the exporter under international trade absorbs high risks in delivery of goods hence he keeps more profit. (More risks ; more profit theory in business). This is an advantage under DPU terms for exporter.
03. Another merit under DPU delivery rules for seller is that; if costs to deliver goods are more, investments as working capital also hikes up to that extend, in turn hike in invoice value of sale of goods. So the exporter can enjoy export incentives against foreign exchange earnings from exporting country if available.
04. The exporter under DPU terms gets opportunity to learn and experience government rules and regulations of exporting country on movement of goods, export customs clearance process, export duty if applicable against his goods etc. This knowledge helps the exporter in contracting similar business transactions with same buyer or different buyer to widen his business volume. This is an advantage for exporter when movement of goods is on DPU terms.
05. Another advantage for exporter under DPU rules is that if an exporter undertakes DPU terms as delivery rules for movement of goods, he becomes familiar with on carriage process at importing country which would be helpful for him to contract similar transactions with same supplier or different buyers.
06. The seller under DPU delivery rules controls over pre carriage, main carriage, on carriage and unloading of goods at named destination thereby the seller can monitor and ensure safety of goods to build up a good business relationship. This is a benefit under DPU terms for exporter.
07. The seller can make sure to avoid damages when loading goods at pre carriage, main carriage and on carriage till buyer’s place, under DPU rules of delivery. This is another advantage for exporter.
08. One of the main advantages for seller under DPU terms is that the seller can ascertain the total cost involved at each point of movement of goods; the total cost of pre carriage, cost involved under export customs clearance, cost of export port handling charges, expenses involved under main carriage, cost to move goods under on carriage etc. This helps the seller to ascertain the costing in movement of goods to derive the selling price of product under different international commercial terms.
09. The selection of freight forwarder to move under DPU terms are undertaken by the exporter in international business and the exporter has the choice to appoint a best service provider to deliver best services to the buyer to strengthen his business relationship with the importer for long term. This is an upper hand for exporter when contract against movement of goods are on DPU basis.
We have explained the advantages under DPU delivery terms to exporter in an international business.
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