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Delivered at Place Unloaded (DPU) incoterm: Explained

DPU incoterms define exporter and importer roles in global trade for all transport modes, including intermodal freight. Learn more about its process in this blog.
Delivered at Place Unloaded (DPU) incoterm
Several terms and agreements govern the movement of goods across borders in international trade. These guidelines are known as incoterms. Short for International Commercial Terms, incoterms were established by the International Chamber of Commerce (ICC) to standardize trade practices worldwide. These terms outline the rights and obligations of importers and exporters in international transactions, ensuring clarity and consistency in the complex space of global commerce.

What is delivered at place unloaded (DPU)?

Delivered at Place Unloaded (DPU) incoterms define the responsibilities of both exporter and importer in international trade. DPU incoterm is a versatile shipping term applicable to all modes of transportation, including intermodal freight. Previously known as Delivered at Terminal (DAT), it is one of the key incoterms in use today. DPU defines the point at which the exporter fulfills responsibility of delivering goods to the importer. It provides explicit guidance on who bears the costs, risks, and logistics associated with transportation and delivery of goods.

When utilizing DPU Incoterms 2020, the exporter and importer must mutually agree on the destination, which can be a port, hub, the importer’s premises, or any other specified location. The exporter should arrange export clearance, freight transportation, and loading and unloading of goods at the designated point in the destination country.

What distinguishes DPU incoterm from other incoterms is that it places the onus to unload goods upon arrival in the country of destination on the exporter. Consequently, the risk associated with the goods is transferred from the exporter to the importer once the unloading process is completed.
Following the DPU Incoterms 2020, the importer assumes responsibility for import duties in the destination country, as well as any last-mile deliveries and warehousing fees that arise after the goods have been delivered.

DPU exporter and importer obligations

When operating under the DPU incoterm, both exporter and importer have distinct obligations and responsibilities.

Exporter’s obligations

Packaging and labeling:
The exporter is responsible for appropriate packaging and labelling of goods for transportation to ensure their safety and compliance with relevant regulations.
Loading and unloading:
Exporter is responsible for unloading goods at the designated point of delivery in the destination country. This may involve coordinating with local handlers or terminal operators to ensure a smooth unloading process.
Freight transportation:
Exporter arranges and pays for transportation of goods from point of origin to the designated destination. This includes coordinating with carriers, booking shipping services, and ensuring goods are loaded onto the transportation vessels.
Export clearance:
Exporter must handle all necessary export clearance procedures, including submitting required documentation and obtaining any permits or licenses needed for exporting goods from the country of origin.

Importer’s obligations

Import clearance:
Importer is responsible for handling all necessary import clearance procedures, including customs documentation, duties, taxes, and compliance with the import regulations of the destination country.
Last-mile delivery:
Once goods are unloaded at the designated point, it becomes the importer’s responsibility to arrange and bear the costs of any transportation required to move the goods from that point to their destination.
Warehousing and storage:
If necessary, importer may need to arrange for warehousing or storage facilities to temporarily store the goods after delivery until they are ready for distribution or use.

Advantages and disadvantages of DPU incoterms

The DPU Incoterm comes with its own set of advantages and disadvantages, offering both benefits and challenges to the parties involved in international trade.

Advantages of DPU incoterms

Clear responsibility:
DPU incoterm provides clear guidelines, specifying that the exporter is responsible for unloading the goods at the designated destination. This clarity eliminates ambiguity and reduces the risk of disputes.
Cost allocation:
DPU incoterms 2020 clearly defines the distribution of costs between the importer and the exporter. The exporter covers expenses related to export clearance, freight transport, loading, and unloading. The importer, on the other hand, assumes import duties, last-mile deliveries, and warehousing fees. This allocation assists in budgeting and financial planning.
Flexibility:
DPU incoterms 2020 can be used for all modes of transportation, allowing for versatility in logistics arrangements. Whether goods are transported by sea, air, rail, or road, it provides a framework for smooth transactions.

Disadvantages of DPU incoterms

Increased seller responsibility:
The DPU Iicoterms 2020 places additional responsibilities on the exporter, including unloading the goods at the destination. This may require additional resources, coordination, and potential risks associated with the unloading process.
Limited control for importer:
The importer may have limited control over the unloading process, as it is the exporter’s responsibility. This can create dependence on the exporter’s efficiency and may impact the overall timeline of delivery.
Potential delays:
If the unloading process at the destination requires complex procedures or encounters unforeseen challenges, it can lead to delays in delivery. The importer must consider these factors when planning their supply chain.

Cost of shipping for exporter and importer under DPU incoterms

Under the DPU Incoterm, the costs associated with shipping are divided between the exporter and the importer. Here’s a breakdown of the costs for each party:

Costs for the exporter

Packing and labeling:
The exporter is responsible for properly packaging and labeling the goods for shipment, ensuring their safety and compliance with transportation regulations.
Export clearance:
The exporter incurs costs related to obtaining necessary export clearances, including documentation and permits required for exporting the goods from the country of origin.
Loading and unloading:
The exporter is responsible for the loading of the goods onto the transportation vessel, covering any associated fees. They also bear the cost of unloading the goods at the designated point of delivery in the destination country.
Freight transportation:
The exporter arranges and pays for the freight transport of the goods from the point of origin to the designated destination. This includes coordinating with carriers, booking shipping services, and paying for transportation fees.
Destination terminal handling charges:
The exporter covers the charges incurred at the destination terminal, which may include fees for handling and storing the goods until they are unloaded.

Costs for the importer

Import clearance:
The importer is responsible for the costs associated with obtaining import clearance in the country of destination. This includes fees for customs documentation, import duties, and taxes imposed by the importing country.
Last-mile deliveries:
After the goods are unloaded at the designated point, the importer assumes responsibility for any additional transportation required to deliver the goods from the unloading point to their final destination. This includes any costs associated with last-mile deliveries.

Differences between DPU and DAP

The DPU and Delivered at Place (DAP) incoterms have some key differences, primarily in terms of unloading responsibilities:

Factors

DPU

DAP

Unloading responsibility
The exporter is responsible for unloading the goods at the named place of delivery in the destination country.
The exporter delivers the goods to the named place but is not responsible for unloading them. Goods are delivered ready for unloading by the importer.
Risk and cost
The exporter bears the risk and cost of unloading the goods at the destination.
The risk and cost of unloading shift to the importer, who assumes responsibility for the unloading process and associated costs.
Flexibility
It is suitable when the exporter is willing to handle the unloading process at the destination, providing a comprehensive service to the importer.
It allows the importer more control over the unloading process and offers flexibility in terms of timing and logistics.

Tips and tricks for DPU

Here are some tips and tricks to consider when using the DPU incoterm:

Clearly define responsibilities:

Clearly define responsibilities of the exporter and importer regarding unloading, including any exceptions or specific conditions related to charges caused by delays or errors in customs clearance.

Open communication:

Foster open communication and collaboration between the importer, exporter, and carrier to ensure smooth operations and avoid disputes. Share relevant information and documents promptly and accurately.

Consider alternatives:

Evaluate whether the DPU Incoterm is the most suitable option for your specific situation. Depending on the circumstances, alternatives such as CPT (Carriage Paid To) or DAP (Delivered at Place) may be more appropriate.

Mitigate damages:

Assess the risk of damages during transportation and consider the use of additional safeguards, insurance coverage, or alternative Incoterms that offer better protection for the goods, such as DAP.

Clearance depot considerations:

If the named place is a clearance depot or if customs do pre-clearance at the border, ensure that all payment obligations to customs are understood and fulfilled.

Double check customs requirements:

Ensure that all necessary customs formalities, such as paying GST or VAT, can be undertaken by the exporter in the importer’s country. Double check all information on documents submitted to customs to minimize potential errors or delays.

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Frequently Asked Questions

DPU (Delivered at Place Unloaded) is for which type of cargo?
DPU (Delivered at Place Unloaded) applies to all types of cargo.
Who pays duty in DPU incoterms?
In DPU incoterms, the importer pays for import duties.
Who takes on the risk and cost of unloading with the incoterms DPU rule?
With the incoterms DPU rule, the exporter takes on the risk and cost of unloading.
What are the latest intermodal shipping trends?
The latest intermodal shipping trends include increased use of technology, eco-friendly practices, and enhanced supply chain visibility.
What are the risks of intermodal freight?
Risks associated with intermodal freight include potential damage or loss of cargo during transfer between different modes of transportation, delays in transfers, and challenges in coordinating logistics across multiple carriers.
What is the difference between FOB and DPU?
The main difference between FOB and DPU is that FOB requires the exporter to deliver goods to the port of shipment, while DPU involves delivering goods to a designated place in the importer’s country.
Published on December 14, 2023.

Sources:
1. https://www.ups.com/us/en/supplychain/resources/glossary-term/delivered-at-place-unloaded.page
2. https://www.incotermsexplained.com/the-incoterms-rules/the-eleven-rules-in-brief/delivered-at-place-unloaded/
3. https://www.aitworldwide.com/resources/incoterms/incoterms-dpu-delivered-at-place-unloaded/
4. https://www.tradefinanceglobal.com/freight-forwarding/incoterms/dpu-delivered-at-place-unloaded/

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