Incoterms rules help the seller and the buyer to determine the allocations of risk and costs at various stages of transport in international trade. Due to mistakes in the interpretation of the DAT (Delivered at Terminal) rule, the word “terminal” has been replaced by Incoterms 2020 DPU (Delivery at Place Unloaded). This article describes what the change means.
Incoterms 2020 DPU – Allocation of costs
| The seller bears: | The buyer bears: |
| export and transit costs (outside the importing country): customs, taxes, export and transit permits, export security clearance and the cost of obtaining all official permits; | the costs of import formalities: customs, taxes, import permits, import security clearance and costs of obtaining all official permits; |
| the costs of control activities, such as quality control, measurement, weighing, counting, delivery of appropriately labeled packaging; | any additional costs if the buyer fails to fulfill its obligations stated in the contract; |
| the costs related to shipping and transport of the goods until they are unloaded and delivered to the buyer; | the costs needed to obtain documents related to import clearance. |
| the costs needed to obtain documents and information related to export and transit clearance; | |
| the costs related to concluding the contract of carriage. |
What are the seller’s obligations?
- Carrying out all the duties under the terms of delivery specified in the contract. This means delivery of the goods along with a commercial invoice in conformity with the contract of sale and other related documents.
- The seller is responsible for unloading goods from arriving means of transport, and then delivering by placing them at the disposal of the buyer at the point agreed in the contract.
- Contracting the carriage of the goods.
- Providing the buyer, at his own expense, with all documents necessary to enable the buyer to take over the goods.
- Assisting the buyer at the buyer request, risk and cost in obtaining any documents necessary for transit and import clearance formalities.
- Packaging and marking the goods.
- Informing the buyer about matters related to receiving the goods.
- Unloading goods at the place of delivery.
What are the buyer’s obligations?
- Assisting the seller, at his request, risk and cost, in obtaining any documents necessary for the export and transit clearance formalities.
- Carrying out and paying for import clearance.
- Informing the seller in advance of all safety requirements related to transport, ship name, loading point and possible delivery date within the period agreed in the contract.
Delivery of goods
“Delivered at Place Unloaded” means that the seller delivers the goods, and at the same time, the risk and costs transfer to the buyer when the goods are unloaded from the arriving means of transport and handed over to the buyer. The place of delivery takes place at the destination indicated in the contract or at an agreed point.
In this case, the place or point of delivery and destination mean the same place. DPU is the only Incoterms rule that requires the seller to unload goods at the place of delivery. For this reason, the seller should ensure that he is able to organize unloading at the place specified in the contract.
Insurance of goods on the terms of Incoterms 2020 DPU
In the case of DPU Incoterms, there is no obligation to make a contract of insurance.
Incoterms 2020 DPU in transport
The DPU rule can be used regardless of the type of transport used. This also applies to the use of more than one mode of transport.
DPU and other Incoterms rules
Due to problems in the interpretation of the term “terminal” in the DAT Incoterms 2010 (Delivered at Terminal) rule, the DPU rule was created. It is because the destination terminal was confused with the customs terminal.
In DPU Incoterms, the seller should ensure that he can organize unloading at the named place. If the parties intend the seller not to bear the risk and cost of unloading, it is recommended to avoid the DPU rule and use a DAP (Delivered at Place) instead.
