Incoterm – Delivered At Place (DAP)
When using Delivered at Place (DAP), the seller assumes all expenses and liabilities related to transporting goods to the mutually agreed-upon location, typically the buyer’s premises. DAP applies to various transport modes, including sea, air, road, and rail freight, leaving the buyer solely responsible for importation and cargo unloading.
It is essential for buyers to note that opting for DAP doesn’t imply an absence of additional charges beyond the product’s DAP price. The only supplementary expenses buyers should consider encompassing freight insurance, import duties, customs brokerage, and any disbursement related to unloading cargo from the container at the final endpoint.
DAP has replaced earlier Incoterms like DAF, DES, and DDU, which were retired in previous decades.
Choosing Delivered At Place
- If the buyer’s warehouse is the agreed place, DAP allows the buyer to pay for the goods upon their arrival at their designated destination, ensuring that their capital isn’t tied up in inventory during the shipping process.
- If the buyer chooses to use a local warehouse, the seller ships products to a nearby bonded warehouse, allowing the buyer to purchase items as needed, with responsibility for import fees and unloading costs.
- If the shipment involves multiple country imports, DAP minimizes freight charges by sharing the cargo in a single container to ports near each import country, followed by deconsolidation at the respective destinations.
Understanding the Responsibilities
Seller’s Responsibilities: Under DAP, the seller’s primary responsibilities are listed as follows:
Packaging
The seller must prepare the goods according to different origin's export packaging standards.
Carriage Loading Charges
When the goods depart from the seller's site, the seller is responsible for expenses encompassing any charges related to placing the cargo onto the initial carrier for its journey to the export location.
Delivery Charges
The seller is responsible for transporting goods to the agreed export location, including the fees involved in the process.
Duties, Taxes, and Custom Clearances
The seller is responsible for the export procedure, including the documentation preparation, expenses, and other examination processes.
Transportation Charges
The seller is responsible for the inland expenses at the origin and destination, including charges from the seller's premises to the carriage and the carriage to the destination.
Carriage Charges
The seller is responsible for covering all freight costs, specifically from the port of origin to the destination.
Terminal Charges
The seller is responsible for both origin and destination terminal charges.
Buyer’s Responsibilities: Once the seller have completed their obligations, buyer’s responsibilities are as follows:
Duties, Taxes, and Custom Clearances
The buyer is responsible for the import procedure, including the documentation preparation, expenses, and other examination processes.
Unloading Charges
The buyer must cover charges for unloading at the destination from the final carrier.
Insurance
While not obligatory, the buyer may opt to secure insurance for the shipment to protect against potential damages.
Pros and Cons for Buyers
Clear Responsibility
Clear responsibility for additional shipping expenses, reducing buyer uncertainty.
Low Liability
DAP is a low-liability option for the buyer, shifting shipping risks to the seller.
Efficient Management
Efficient cash flow and inventory management for regularly reordered or guaranteed quantity items.
Payment Flexibility
Sellers handle shipping, enabling buyers to pay upon cargo arrival.
Local Bonded Warehouses
Bonded warehouses near buyers' locations allow for smaller, more efficient orders.
Custom Delays
There is potential for customs-related delays as customs clearance often precedes cargo delivery.
Additional Costs
Potential additional costs, such as demurrage or detention during delays, become the buyer's responsibility.
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