{“main”:"## Mastering Delivered Ex-Ship (DES): A Comprehensive Guide
What is Delivered Ex-Ship (DES)?
Delivered ex-ship (DES) was a pivotal trade term requiring sellers to deliver goods to buyers at an agreed port of arrival, assuming all costs and risks up to that specific juncture. Once the goods reached the port, the responsibility and costs transferred to the buyer. The term was relevant for both inland and sea shipping but was officially discontinued in 2011.
Key Insights
- Scope and Applicability: DES was an internationally recognized commercial term applied in both inland and sea shipping scenarios, particularly prominent in charter shipping.
- Responsibility Shift: Once the goods were delivered at the designated port, all subsequent responsibilities and risks shifted from the seller to the buyer.
- Legacy and Convergence: While DES was replaced in 2011 by Delivered at Terminal (DAT) and Delivered at Place (DAP), it laid the groundwork for existing international shipping norms.
In-Depth Understanding of Delivered Ex-Ship (DES)
International transportation contracts often include specific trade terms defining the logistics of delivery, payment, risk transfer points, and the extent of cost coverage. DES was one such international term where the seller assumed comprehensive responsibility for delivering goods to the agreed destination port. This encompassed managing shipment, paying the shipping company, and purchasing insurance.
The seller’s obligations concluded once the goods were delivered onboard at the port, not yet cleared for import. From this stage, the buyer assumed responsibility for unloading, any import duties, and subsequent transportation or storage costs.
Significance of International Commercial Terms (Incoterms)
‘Incoterms’ are a set of globally recognized contractual terms laid out by the International Chamber of Commerce (ICC) to streamline and facilitate international trade. While often aligned with domestic trade frameworks like the American Uniform Commercial Code (UCC), the interpretations of Incoterms are designed for the global context.
As DES is defunct, similar terms like Delivered ex-quay also cease to apply, requiring modern traders to utilize replacements like DAP and DAT for clarity in their international trade contracts.
Transition to Modern Terms: DAT and DAP
Post-2011, DES transitioned to two updated Incoterms: Delivered at Terminal (DAT) and Delivered at Place (DAP).
- Delivered at Terminal (DAT): This term dictates that the seller covers all transport costs until the goods are delivered and unloaded at the specific delivery terminal, also handling export clearance responsibilities.
- Delivered at Place (DAP): Here, the seller ensures goods arrive safely at the final delivery point or destination, bearing packaging costs and aiding in transportation logistics up to the delivery point. Post-delivery, all costs and risks transfer to the buyer.
Example Scenarios
Consider a scenario where Seller X ships goods to a port in Kennebunkport, Maine. If the vessel encounters a storm mid-journey and sinks, Seller X absorbs the loss as the shipment has not arrived at the port. Conversely, if the ship reaches Kennebunkport safely but sinks due to a storm while docked, Buyer Y bears the loss as they had already assumed responsibility upon the ship’s arrival.
Seller Responsibilities in DES
In DES agreements, sellers were tasked with ensuring delivery to the identified port while covering transportation costs and taking on risks until the goods arrived at the port. However, sellers were not responsible for customs clearance or unloading at the final destination.
Buyer Responsibilities in DES
Upon goods arriving at the designated port, the buyer assumed responsibility. This included costs for unloading, import duties, and subsequent transportation logistics, as well as ensuring appropriate insurance coverage.
Handling Risk of Loss or Damage
The risk of loss or damage remained with the seller until the goods reached the port of destination. Once at the port, the risk transferred to the buyer, aligning with the fundamental shift in responsibility defined by DES.
Cost Allocation in DES Transportation
Transportation costs under DES were the seller’s responsibility exclusively for delivering goods to the destination port. Any additional costs beyond this point fell on the buyer.
Conclusion
Delivered Ex-Ship (DES) was an essential international trade term focusing on ensuring the seller’s responsibilities were fulfilled until goods arrived at the agreed destination port. Post-arrival, the responsibilities for further processing such as unloading, customs clearance, and additional transit shifted to the buyer. Understanding the nuances of such Incoterms, even those now redundant, remains crucial for clarity in modern international trade contracts.
Related Terms: Incoterms, Delivered at Terminal (DAT), Delivered at Place (DAP), Ex Works (EXW).
References
- Omnitrans. “Incoterms”.
- Corporate Finance Institute. “Delivered Ex Ship (DES)”.
