Demerits under DDP terms of delivery to buyer
Here we discuss about the challenges faced by an importer when he handles DDP delivery terms.
What are those disadvantages to a buyer under DDP terms?
Let us discuss those demerits one by one below:
01.One of the main drawbacks for importer under DDP delivery terms is that the buyer has very less role only in movement of goods to reach him from the seller’s place. So from the point of view of a business, he may have to pay more profit margin against the risks undertaken by the seller under movement of goods from the seller’s location to the buyer’s location.
02. In an export import business, under DDP terms, the exporter initially meets all expenses against movement of goods to the destination named location of importer. All such costs are added in the invoice value of sale of goods as per the sale contract between importer and exporter. Compared to any other terms of delivery, under DDP terms, the foreign outward remittance payable by importer would be more. This is a drawback for buyer under DDP delivery terms.
03. One of the other disadvantages for importer when goods are moved on DDP basis is that the importer loses the chances to learn government rules and regulations to move goods from exporter’s country as pre carriage. The exporter also misses the opportunity to experience local transportation movements in exporter’s country, under DDP terms.
04. Since the seller undertakes export customs clearance process under DDP delivery terms, the buyer cannot learn and experience export customs clearance process and port handling process in exporter’s country, thereby the buyer may face difficult to handle similar business opportunity with same buyer or another buyer in future to contract delivery rules other than DDP. This is a drawback for importer under DDP contract of carriage
05. Another drawback for importer under DDP is that, except unloading of goods, since all movements are undertaken by the exporter under DDP terms of delivery in international trade, the importer does not have any control over safety of goods. So the importer should confirm, before unloading of goods at his named destination that there is no damage or loss of goods to avoid disputes after unloading.
06. Since the exporter undertakes import customs clearance process under DDP delivery terms, the importer missing chance to learn and experience such government rules and regulations and other port handling process in his own country. This results an inability to contract with his buyers who requires such services of import customs clearance, pre carriage, on carriage etc. Undertaking less risk in business means less profit. This is a weakness for importer when contracting movement of goods on DDP delivery terms
07. Another drawback for importer when goods are moved on DDP delivery terms is that the importer cannot ascertain the cost involved separately in each point of movement of goods; say pre carriage cost, export clearance cost, export port handling cost, import clearance cost, import taxes against his product, import port handling charges and on carriage cost under DDP terms in export import trade.
08. Under a DDP delivery terms, if the exporter does not appoint an efficient freight forwarder, there are chances of delay in delivery of goods and other inconvenience to the importer which could result a huge loss to importer against his production planning, warehousing etc. The delay in delivery of goods, damage of goods, loss of goods etc. also affects further business relationship with the importer’s customers in turn with the exporter. This is another pitfall for an importer when goods are moved on DDP terms in international business.
The above information is about the disadvantages under DDP delivery terms from an importer’s point of view in international business.
Would you share your views in handling DDP terms of delivery from buyer’s point of view?
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