DPU, disadvantages to Buyer (Importer)
The below information is our findings when deeply analyzing each delivery term from the perspective of both buyer and seller under Incoterms 2020.
Is DPU terms good for buyer? Any dangers involved under DPU terms from importer’s perspective in an import export business?
Let us below discuss the demerits one by one involved under DPU delivery terms against an importer:
01.One of the main drawback for importer when contract of carriage is on DPU terms is that the importer has to pay more amount to exporter under DPU delivery terms, as the seller initially meets total charges to move goods from his place to the buyer’s named location at buyer’s country. Here, the invoice value against sale of goods would be more comparatively with most of the other delivery rules, resulting outward remittance of foreign currency.
02.Under DPU delivery terms, the buyer does not have any control over movement of goods even for unloading goods. Since the unloading takes place at buyer’s country, the seller cannot directly supervise unloading, so he appoints his freight forwarder to undertake unloading of cargo. This is a drawback for buyer when delivery terms are on DPU basis.
03. Another disadvantage for importer when delivery terms are on DPU terms is that comparatively under DPU terms of delivery, the cost of goods becomes more expensive, as the seller may keep decent profit margin, as he absorbs more risks in delivery with his efficiency in movement of goods both at buyer’s country and seller’s country.
04. One of the other downsides for importer when contract of carriage is on DPU terms is that the importer may not have much experiencing in handling government rules and regulations of exporting country under DPU terms, and the buyer misses the opportunity to handle such movement of goods under DPU. The buyer may lose orders against his products also if the buyer specifically needs deliver terms other than DPU, DDP and DAP.
05. Under DPU, the importer is also missing opportunity to handle on carriage process. Once after import customs clearance, the seller is liable to move the goods to buyer’s named destination and unload under DPU terms of delivery. This is a stumbling block for buyer in a business where delivery rules are on DPU basis.
06.Since the risk and cost of unloading goods at destination named place is under the responsibility of exporter under DPU terms, the importer cannot monitor and ensure the safety of goods. This is a drawback for importer under DPU terms.
07. Under DPU terms of delivery, the buyer misses the opportunity to ascertain the cost at each point of movement of goods; say pre carriage cost, main carriage cost, on carriage cost etc. This is another fly in the ointment for a buyer when goods are moved under DPU terms of delivery.
08.Since total movement of goods are undertaken by the seller under DPU delivery rules, the buyer does not have any hold on shipping carriers or freight forwarders. Appointing a poor freight forwarder by the seller may result the delay in delivery of goods and other inconvenience to the business relationship with buyer. This is a drawback for importer when goods are moved on DPU delivery terms.
09. One of the other disadvantages under DPU delivery terms for importer is that; since the pre carriage, main carriage and on carriage are undertaken by the exporter under DPU terms in export import business, the importer has to request the exporter for obtaining Export Manifest, Vessel tracking information and other shipping and delivery information.
Have you satisfied reading the above information about the stumbling blocks from buyer’s perspective when he contracts DPU delivery terms?
Share below your experience in handling DPU terms and comment below your thoughts: