In the world of international shipping and customs, understanding the different Incoterms is crucial for both buyers and sellers. Incoterms, short for International Commercial Terms, are a set of rules published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in the delivery of goods. One such Incoterm that is widely used in global trade is DAP, which stands for “Delivered At Place.”
In this blog, we will delve into the details of DAP Incoterms, explaining how it works, the responsibilities of both the buyer and seller, and how it compares to other similar terms.
What is DAP (Delivered At Place)?
DAP, or Delivered At Place, is an Incoterm that was introduced in the 2010 revision of Incoterms and is included in the latest 2020 version as well. It is a flexible term that can be used for any mode of transportation, whether by sea, air, road, or rail, or even a combination of these modes. Under DAP terms, the seller is responsible for delivering the goods to a specific location agreed upon by both the buyer and seller. This could be the buyer’s warehouse, a port, or any other designated place.
Key Features of DAP Incoterms
- Seller’s Responsibility: Under DAP, the seller is responsible for all costs and risks involved in bringing the goods to the agreed-upon destination. This includes packing, loading, inland transport, export customs clearance, and international shipping. However, the seller is not responsible for unloading the goods at the final destination.
- Buyer’s Responsibility: The buyer is responsible for unloading the goods upon arrival at the designated place. The buyer also handles import customs clearance, including paying any import duties, taxes, and other related charges.
- Risk Transfer: The risk of loss or damage to the goods passes from the seller to the buyer when the goods are delivered at the agreed destination, ready for unloading. This means that the seller bears the risk until the goods reach the final location, but the buyer is responsible for any risk associated with unloading and further transportation.
- Unloading Costs: Although the seller is responsible for delivering the goods to the destination, the cost of unloading them at the destination falls on the buyer unless otherwise agreed.
Detailed Explanation of Responsibilities
Seller’s Responsibilities
- Delivery to the Agreed Place: The seller is responsible for arranging transportation and delivering the goods to the agreed place. This includes handling all the logistics from the origin to the destination.
- Costs Covered by the Seller:
- Inland Transport: The seller bears the cost of transporting the goods from their premises to the port of departure.
- Export Customs Clearance: The seller is responsible for clearing the goods for export, including obtaining all necessary documentation such as the bill of lading, commercial invoice, and packing list.
- International Shipping: The seller pays for the transportation of the goods from the port of departure to the port of arrival in the buyer’s country.
- Insurance: Although insurance is not mandatory under DAP, the seller may choose to insure the goods against loss or damage during transit, up until the point of delivery.
- Risk Transfer: The risk of damage or loss of goods remains with the seller until the goods are delivered to the designated place. After delivery, the risk is transferred to the buyer.
Buyer’s Responsibilities
- Unloading of Goods: The buyer is responsible for unloading the goods at the designated place. This includes arranging for labor, equipment, and any other resources needed to safely unload the goods.
- Costs Covered by the Buyer:
- Import Customs Clearance: The buyer is responsible for clearing the goods through customs in their country, including paying any import duties, taxes, and other fees.
- Inland Transport (Post-Delivery): After unloading, the buyer is responsible for transporting the goods to their final destination, such as a warehouse or distribution center.
- Unloading Costs: The buyer bears the cost of unloading the goods at the destination unless otherwise agreed with the seller.
- Risk Transfer: Once the goods are delivered to the agreed place and are ready for unloading, the buyer assumes all risks associated with the goods. This includes the risk of loss or damage during unloading and subsequent transportation.
Comparison with Other Incoterms
DAP vs. DDP (Delivered Duty Paid)
- DDP: Under Delivered Duty Paid (DDP), the seller’s responsibility extends beyond that of DAP. The seller is responsible for not only delivering the goods to the destination but also for paying all import duties and taxes. Essentially, the seller bears all costs and risks until the goods are delivered to the buyer’s premises, fully cleared through customs.
- DAP: In contrast, under DAP, the buyer is responsible for import customs clearance and associated costs, while the seller’s responsibility ends once the goods are delivered to the agreed destination.
DAP vs. CIF (Cost, Insurance, and Freight)
- CIF: Cost, Insurance, and Freight (CIF) is another commonly used Incoterm, but it is applicable only for sea and inland waterway transport. Under CIF, the seller is responsible for delivering the goods to the port of destination, including paying for the cost of transport and insurance. However, the risk transfers to the buyer as soon as the goods are loaded onto the ship.
- DAP: DAP offers more flexibility as it can be used for any mode of transport. The risk and cost are borne by the seller until the goods reach the agreed destination, unlike CIF, where the risk shifts to the buyer once the goods are on board the ship.
FAQs on DAP Incoterms
Is DAP the same as DDU?
No, Delivered Duty Unpaid (DDU) is no longer included in the revised 2020 Incoterms. The closest term to DDU in the current Incoterms is DAP, where the seller delivers the goods to the agreed destination, but the buyer is responsible for import customs clearance.
Does DAP include unloading?
Under DAP, the seller is responsible for delivering the goods to the destination, but the buyer is responsible for unloading the goods.
Who pays for freight under DAP?
The seller is responsible for paying the freight charges under DAP since they are responsible for transporting the goods to the agreed destination.
Does DAP include customs clearance?
DAP includes export customs clearance, which is the responsibility of the seller. However, import customs clearance is the buyer’s responsibility.
What is the difference between DAP and DAT?
The main difference between DAP (Delivered At Place) and DAT (Delivered At Terminal) is the point of delivery. Under DAP, the goods are delivered to any agreed place, such as the buyer’s warehouse. Under DAT, the goods are delivered to a terminal, such as a port or airport, and the seller is responsible for unloading them at the terminal.
Is DAP the same as CIF?
No, DAP and CIF are different Incoterms. CIF is used only for sea and inland waterway transport and the risk transfers to the buyer when the goods are loaded onto the ship. DAP can be used for any mode of transport and the risk remains with the seller until the goods are delivered to the agreed place.
Conclusion
In conclusion, DAP (Delivered At Place) is a versatile and widely used Incoterm in international trade that clearly defines the responsibilities of both the seller and the buyer. Under DAP, the seller is responsible for delivering the goods to a designated place, covering all costs and risks until the point of delivery. The buyer, on the other hand, is responsible for unloading the goods and handling import customs clearance. Understanding the nuances of DAP can help businesses navigate the complexities of international shipping and customs, ensuring a smooth and efficient trade process. Whether you are a seller or a buyer, knowing your responsibilities under DAP can help you manage risks and costs effectively, leading to successful international transactions.Also Read: LCL Shipments in Logistics and Shipping : Meaning, Costs and More
