DAP Delivered at Place - Incoterms® 

Incoterms® DAP - Delivered At Place 

Incoterms® DAP - Delivered At Place - With the DAP Incoterm, the seller delivers the goods to the agreed place of destination. The seller assumes all the risk and cost until the goods are ready to be unloaded at the named place at destination. But why is it necessary and how can shippers better understand its nuances? DAP Delivered at place

International trade is subject to cultural differences of expectation and many potential barriers. Incoterms were created by the International Chamber of Commerce (ICC) and serve to keep standards in place to ensure clear and concise understanding of liability and responsibility for handling international shipments. 

Delivered at Place (DAP) is one of these terms, and it has a simple meaning. However, it can be difficult for new shippers or those just entering the international trade landscape to understand its advantages and drawbacks, as well as when it’s best used. 

What Does the Incoterm DAP Really Mean?

The DAP Incoterm, or Delivered at Place, is a shipping term where the seller delivers the goods to an agreed-upon place of destination, meaning the seller is responsible for the movement of goods from the origin point to an agreed upon delivery point after the on-carriage movements at the destination.

In other words, the seller assumes all risks and costs until the goods are ready to be unloaded at the named place for delivery of goods.

The seller is responsible for packaging, documentation, export approval, loading charges, and final delivery to an agreed destination, and while the seller bears all costs and responsibility to this point, the sales contract could again get muddy with different terms in use. However, the DAP terms in shipping contracts can be a bit confusing, especially if a party doesn’t fully understand when a different Incoterm may be more appropriate. 

Regardless, the meaning of DAP remains the same–get the freight to the named destination after its on-carriage transport  and handle each and every mode of transportation to that point. But this specificity is also why many buyers will prefer DAP freight terms when engaging in international trade. Let’s dig a bit deeper into why by exploring the advantages of DAP delivery terms. 

Advantages of Using DAP

Choosing DAP can be a strategic move, offering a host of advantages, predominantly for buyers. It’s crucial for all parties involved to grasp the inherent benefits of this Incoterm to navigate international trade more effectively and to foster positive business relationships.

  1. Simplicity in Role Allocation. Unlike CIF or CPT, DAP extends the seller’s responsibility further inland after arrival at the destination point. The clarity provided by DAP in defining roles minimizes confusion and helps in avoiding conflicts, making transactions smoother and more straightforward.
  2. Seller’s Oversight on Transit. When sellers manage the transportation, it often leads to enhanced care and reduced risk of damage to the goods, ensuring they reach the buyer in optimal condition. This can be especially useful for high-value shipments or those requiring advanced care or extensive manufacturing, such as a seller’s private ocean terminal for handling oversized equipment. 
  3. Economic Efficiency for Buyers. Buyers often find economic relief as they are not burdened with the logistics and costs of transportation, allowing them to focus on other aspects of their business. Further, they can better prioritize transportation in their country of operation, meaning they’re more likely to have better relationships and potentially lower costs of transportation from the customs facility to their independent importer facility. In a sense, they carry the only true last mile of delivery to their place of business, and the rest falls to the seller to arrange. 

What’s the DAP Shipping Limit? 

While DAP can streamline many aspects of international trade, it also brings forth several challenges, predominantly impacting sellers. While buyer’s enjoy the benefits of DAP, there can be some issues.

For example, if the buyer wants to take control of the shipment earlier, such as the point of entry into a country at a destination port, a different Incoterm should be used. In a sense, the buyer doesn’t truly have control over the process through the final destination (for this particular transaction and provided the shipment doesn’t go through customs). 

Regardless, awareness and thoughtful consideration of these challenges are pivotal for sellers to determine whether DAP aligns with their strategic and operational goals. Here are a few other potential issues to take into account before using the shipping term, DAP. 

  • Elevated Seller Burden. Sellers find themselves navigating a sea of responsibilities and absorbing substantial risks up until the delivery point, necessitating meticulous management and risk mitigation strategies. Plus, the higher burden of knowing all regulations and requirements for the importing country falls to the seller, and since the seller is responsible for unloading, it’s entirely possible that it may lead to higher costs too. There is also a caveat that this only applies to areas with a free trade zone transit. Remember that if the buyer has to assume the cost of handling customs, while not paying customs costs, it switches to a Delivered Duty Unpaid (DDU) transaction.
  • Cost Implications for Sellers. The encompassing responsibilities can translate to heightened costs for sellers, requiring a thorough evaluation of financial implications and the deployment of cost-effective solutions. For sellers that do not typically operate in the destination country, they may end up paying a higher rate for the on-carriage transport to the buyer’s custom’s facility than what the buyer may be able to get. Yet, the contract of sale can also stipulate whether an additional implication can alleviate this burden, such as using DDU, or 
  • Buyer’s Limited Influence. The constrained control for buyers over the transit process mandates precise communication and agreement on expectations to preclude any potential dissatisfaction or misalignments. However, this also is a double-edged sword for sellers as they must take extra care to ensure they live up to such expectations throughout the delivery at the predetermined place. 

Ideal Scenarios for DAP Usage

DAP is most suitable when the buyer either prefers or requires the seller to manage the transportation of goods, such as when the buyer lacks the necessary resources or expertise to oversee the transportation process. It is also ideal when the seller can access better transportation resources or achieve more cost-effective transportation solutions. Like all Incoterms, it comes down to who you know and what will be the most cost-effective solution for the shipment.

Consider a scenario where a furniture manufacturer in Sweden is selling tables to a retailer in the United States. The seller, having better access to shipping resources and expertise for transatlantic trade, uses the DAP Incoterm to deliver the tables to the retailer’s specified customs location in the United States. The seller manages and bears the costs and risks of transportation until the tables are ready to be unloaded at the destination beyond the port of entry into the US but before passing through customs.

Choose Crane Worldwide Logistics to Get the Most From DAP When Handling International Trade

Understanding the obligations of both the buyer and seller is crucial when using any Incoterm, including DAP. And missteps in using Incoterms could put your costs into the red. However, Crane Worldwide Logistics can help you ensure you’re following the right path and choosing the Incoterms to put your best foot forward in every transaction. 
There are eleven Incoterms covering international shipments, each catering to different needs and scenarios. If you need shipment support or have any queries regarding the suitable Incoterm for your transaction, please reach out to the team!

FREE DOWNLOAD: You can download our free Incoterms chart which provides simple explanations of all eleven incoterms here

More detail on Incoterms: 

Click below for more information on shipping terms:

FCA (Free Carrier) 

CPT (Carriage Paid To) 

CIP (Carriage and Insurance Paid To) 

DAP (Delivered at Place) 

DPU (Delivered at Place Unloaded) 

DDP (Delivered Duty Paid)

FAS (Free Alongside Ship)

FOB (Free On Board)

CFR (Cost And Freight)

CIF (Cost, Insurance And Freight)

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