As we started out in the Incoterms series, the seller had the least responsibility in the Ex-Works. She was just expected to manufacture the goods and pack it. The Buyer takes care of all the transport. But not anymore.
In Category D, the seller is required even to pay the Delivery duty of the destination country in one Incoterm. So the Buyer is the king here and seller takes the maximum responsibility in the transit chain.
Delivered at Place (DAP):
It is an interesting Incoterm. The seller has to deliver goods at the expected place, but not unload it from the vehicle. Unloading is the responsibility of the Buyer.
- Cost & Risk transfers at the same place from the seller to buyer in DAP – At the destination delivery point
- But the Import duties has to be paid by the buyer, if the seller has to incur any such charges.
- No insurance is required from the seller. There is a risk of goods getting damaged even though she delivers at the sellers appointed place.
Delivered at Place Unloaded (DPU):
DPU is a step above DAP. Here, the goods will be unloaded at the buyer’s required destination.
- This is the only Incoterm that requires the seller to unload the goods at the destination.
- Even in this Incoterm, the import duties is taken care by the seller.
- So the risk and cost of the transport is taken care by the seller until she unloads the goods at the buyer’s location.
Delivery Duty Paid (DDP):
So here is our 11th Incoterm, which puts the maximum responsibility on the seller. She owns it all!
In DDP, the goods are supposed to be
- Delivered at the place of disposal as decided by the buyer.
- Cleared of all Import Formalities
- Ready for unloading
It is the only Incoterm where Import Formalities is taken care by the buyer. It is usually not a recommended practice as the Import processes differ with each country and the seller will have to take responsibility for prompt clearance. If the seller does not have an intricate and a robust supply chain network, it can become a roadblock.
Responsibility matrix for the seller:
Bottomline: The seller has to deliver the goods at the buyer’s required place. This additional responsibility is accepted when one signs for Category D incoterm. Delivery at the destination, which is most probably a different country requires streamlined supply chain support and capital from seller’s side. Thus at the end – Category D makes the Buyer – a King!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about any specific circumstances.