5 INCOTERMS 2020 Grupo D

Understanding Group D of Incoterms

Overview of Group D Incoterms

• Adolfo Carreño introduces the discussion on Group D of Incoterms, specifically focusing on delivery terms: DAP (Delivered at Place), DPU (Delivered at Place Unloaded), and DDP (Delivery Duty Paid).

• All three terms share a common characteristic where the exporter delivers goods to a specified location in the destination country, unlike previous Incoterms where risk was limited to the country of origin.

Risk Assumption in Group D

• In Group D, the seller assumes a greater percentage of risk, covering responsibilities until the goods reach the destination country.

• This is distinct from earlier Incoterms where seller liability ended at the origin; here, sellers are responsible for risks throughout transit to the destination.

Comparison Between Delivery Terms

• The difference between DAP and DPU lies in whether goods are delivered loaded onto transport or unloaded; both involve delivery to a designated place but differ in unloading status.

• The simplicity of these terms makes them easier to understand compared to other groups within Incoterms.

Practical Example: Peruvian Buyer Scenario

• Carreño uses an example involving a Peruvian buyer from Replay department stores purchasing polo shirts from a Chinese manufacturer.

• The process begins with order placement by the Chinese manufacturer, who prepares goods for international transport and loads them into a container.

Export Process Steps

• Goods are transported to a temporary storage facility for export processing, which involves hiring a customs agent for necessary documentation.

• Once cleared for export, containers are loaded onto ships. After arriving at Callao port, unloading procedures commence.

Import Procedures Explained

• Upon arrival at Callao port, imported goods undergo various customs clearance processes that can be categorized into three modalities: anticipatory dispatch before ship arrival, exceptional dispatch after arrival, and urgent dispatch for time-sensitive products.

• The discussion emphasizes that importation can vary based on timing and urgency related to customs procedures.

Importation Process and Incoterms Explained

Overview of Temporary Storage and Import Procedures

• The merchandise must first be sent to a temporary storage facility where the import process will take place. Once customs clearance is granted, the importer can access or transport the goods to their own warehouse.

• After unloading the goods, the empty container must be returned to a designated location for empty containers. This is part of the standard procedure following importation.

Understanding DAP (Delivered at Place)

• DAP involves the exporter delivering goods to any specified location within the destination country, but does not include payment for import procedures. The buyer assumes responsibility for these costs and risks.

• Commonly used in transactions involving capital goods or equipment, DAP allows buyers to request delivery directly to their warehouse without handling import formalities themselves.

• The seller typically has detailed knowledge about transporting and handling such machinery, which justifies this arrangement where they manage logistics while leaving customs duties to the buyer.

Distinction Between DAP and DPU (Delivered at Place Unloaded)

• The key difference between DAP and DPU is that in DPU, goods are unloaded from the last mode of transport upon delivery, whereas in DAP they are not unloaded by the seller. This distinction affects how responsibilities are shared between parties based on cargo type.

Introduction to DDP (Delivered Duty Paid)

• In contrast with both DAP and DPU, under DDP terms, all responsibilities including import duties fall on the seller; thus, buyers receive their goods ready for use without needing to handle any customs processes themselves.

• Buyers typically specify their warehouse or factory as a delivery point under this term; however, unlike previous terms where buyers had some involvement in logistics or customs clearance, here they do not engage in those processes at all.

Understanding DDP in E-commerce

Overview of DDP (Delivered Duty Paid)

• The concept of DDP is well-suited for e-commerce, where sellers promise to deliver goods directly to the buyer's location without requiring the buyer to handle importation processes.

• Major e-commerce platforms like Amazon, AliExpress, and Wish utilize this model, ensuring that customers receive their products at home without additional hassle.

Import Regulations in Peru

• In Peru, if the invoice value of a product is less than $2,000, the importer is not required to handle import procedures; instead, the courier company can manage these tasks.

• This regulation facilitates small purchases typical in e-commerce by allowing couriers to take care of customs clearance when values are below this threshold.

Key Terms and Concepts

• The seller's commitment under DDP ensures that they handle all import duties and customs processes. This alleviates concerns for the importer regarding customs clearance.

• The discussion also touches on other terms such as DAP (Delivered at Place), which involves delivery at an agreed location but does not include unloading responsibilities.

Exploring Delivery Terms: DAP and DPU

Understanding DAP (Delivered at Place)

• Under DAP terms, the seller delivers goods to a specified location in the destination country—typically a warehouse or factory—without unloading them.

• Sellers are responsible for preparing cargo, loading it onto transport vehicles, handling export documentation, and managing international transportation costs.

Insurance Considerations

• While insurance is not mandatory under these terms, it is advisable for sellers to purchase coverage against potential loss during transit. If goods are lost or damaged en route, claims would fall on the seller.

Transitioning to DPU (Delivered at Place Unloaded)

• Unlike DAP, under DPU terms, sellers must ensure that goods are unloaded upon arrival at the destination. This represents a key difference between these two delivery methods.

Final Insights on Delivery Duty Paid (DDP)

Responsibilities Under DDP

• In contrast with other delivery terms like DAP and DPU, under DDP conditions, sellers must complete all necessary importation paperwork and pay any applicable duties before delivering goods to buyers.

Importación y Gastos Asociados

Proceso de Importación

• El trámite de importación puede ser realizado por una empresa Currier si el valor comercial del producto es menor a $2000.

• La empresa Currier, contratada por el exportador, asume los gastos relacionados con la importación.

Gastos Asumidos por el Vendedor

• Los gastos que asume el vendedor incluyen la preparación de la carga y su embalaje para transporte internacional.

• El vendedor también se encarga del despacho aduanero tanto para exportación como para importación.

Transporte y Seguro

• Es recomendable adquirir un seguro a favor del exportador durante el proceso de transporte internacional.

• La descarga de mercancía se realiza al llegar al país de destino, incluyendo transporte interno hasta el lugar de entrega.