In the D rules delivery does not occur until a named destination place. How it gets there, what origin port or place it left and when it left are all irrelevant. This puts the D rules completely at odds with the typical LC that requires a port of shipment, port of destination and a latest shipment date.
Even the mode of transport is entirely the seller’s choice, so long as the goods are placed at the disposal of the buyer either not unloaded (DAP and DDP) or unloaded (DPU) at the named destination. Only after delivery is a seller typically entitled to payment for the goods.
Can an LC be structured to work with the D rules? Yes, but only with great difficulty for the banks as it will be outside their comfort zone and may have an impact on their anti-money laundering and anti-terrorism funding precautions.
In essence the D rules only work comfortably with pre-shipment payment or open account payment.
Want to find out more about Incoterms® Rules 2020?
We have summarised the 11 Incoterms which have recently been revised by the ICC Incoterms Drafting Committee for 2020.
View our Incoterms® Rules 2020 hub here with free guides, podcasts, videos and content!