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?
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.
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.
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.
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.
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.
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
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)