What Is Delivered-at-Place (DAP)?
Delivered-at-Place (DAP) is an international trade term that defines a deal where the seller agrees to cover all costs and assume any risks associated with transporting goods to a specified location. In DAP agreements, the buyer, once the shipment reaches its destination, is responsible for paying import duties and any other applicable local taxes.
Key Takeaways
- Clear Definition: Delivered-at-Place is an international trade term introduced by the International Chamber of Commerce (ICC) in its revised Incoterms in 2010.
- Risk and Cost: Under DAP, the seller takes on all risks and costs associated with moving goods to the specified location.
- Buyer’s Responsibility: After shipment arrival, the buyer handles unloading and incurs import duties and taxes.
- Streamlined Trade: Incoterms provide clear roles to reduce misunderstandings in trade contracts.
Understanding How Delivered-at-Place (DAP) Works
When it comes to international trade contracts, clear rules help both buyers and sellers understand their roles. DAP agreements ensure the seller takes responsibility for all risks and costs up until the agreed destination. This includes packaging, securing documentation, obtaining export clearance, paying for loading and all transportation charges, until delivery. Once the shipment arrives, the buyer must handle unloading and fulfill all import customs and tax requirements.
A typical DAP agreement might specify something like, ‘delivered-at-place, Port of Oakland,’ clarifying the point where the seller’s liability ends, and the buyer assumes control.
Introduced in 2010, DAP replaced the previous term ‘Delivery Duty Unpaid’ (DDU) to simplify trade agreements. The opposite of DAP is ‘Delivered Duty Paid’ (DDP), which requires the seller to manage all transport costs plus import duties and taxes.
Obligations Under DAP
Seller’s Commitments:
- Documentation: Securing tallies, invoices, and export paperwork.
- Licensing: Obtaining necessary export licenses and handling customs issues at their end.
- Transport: Covering pre-carriage, loading, main carriage, and delivery costs.
- Costs and Risks: Bearing shipping costs and assuming any risk of loss during transit.
- Proof of Delivery: Providing evidence of delivery to the buyer.
Buyer’s Commitments:
- Payment: Paying the seller for goods and informing them of the destination.
- Import Issues: Handling import formalities, duties, and related costs.
- Unloading: Arranging and managing the unloading of cargo.
- Post-Delivery Transport: Transporting the goods to their final location like warehouses or retail sites.
Importance of Incoterms
The ICC established Incoterms in 1936 to simplify trade by clearly defining buyer’s and seller’s responsibilities. With periodic updates, these terms help avoid confusion in trade contracts by standardizing roles including shipping, delivery locations, and cost-bearing. The 2010 update replaced older terms with more straightforward ones such as DAP to further streamline international trade transactions.
Even with accurate Incoterms, issues like demurrage—a charge for incomplete unloading due to delayed documentation—can arise, emphasizing the need for all parties to meet national and local regulations.
What Does Delivered-at-Place Mean?
Under DAP rules, the seller manages all responsibilities and costs related to preparing and transporting goods to the destination. The buyer must bear taxes, duties, and any unloading costs upon arrival.
What Are Incoterms?
Incoterms are global trade rules established by the ICC that outline the responsibilities and roles of buyers and sellers. These terms offer clarity and minimize disputes in international trade contracts. Examples include Delivered-at-Place, Carriage and Insurance Paid To, and Delivered Duty Paid.
Difference Between DAP and DDP
- DAP (Delivered-at-Place): Seller handles all transport risks and costs up to the destination; buyer takes over upon arrival for import taxes, duties, and unloading.
- DDP (Delivered Duty Paid): Seller assumes all risks, transportation costs, duties, and taxes through to the final destination.
Conclusion
Navigating international trade can be complex. ICC’s Incoterms, including DAP, bring essential clarity. DAP uniquely assigns preparation and shipping costs to the seller until delivery, while the buyer bears responsibility post-arrival. These agreements reduce misunderstandings, streamline transactions, and ensure smooth global trading.
Related Terms: Incoterms, Delivered Duty Paid, Delivery Duty Unpaid, Export, Import, Shipping Costs, Trade Contracts.
References
- International Chamber of Commerce. “The Incoterms Rules 2010”.
- International Chamber of Commerce. “History”.
