“DAP- Delivered at Place,” even the phrase excites you if you are a regular buyer. However, is the term that simple or not; all the frequently asked questions in this article will remove your queries regarding DAP Incoterms.
When it comes to the DAP incoterms, while the destination of things to be delivered at a place that is decided by both buyer and seller, the risk of loss is being transferred from the seller to buyer, this is because as the order is placed, the seller is responsible for arranging the products and delivering them and throughout this process the risk is on his side.
Once the products are available for unloading, the buyer has all the risk transferred to his shoulders. On goods reaching the desired destination, the buyer is now responsible for all the further tasks, including unloading them, applicable local taxes, import clearance, and local taxes.
If you want to know more about DAP incoterms, a detailed FAQ guide is here.
How Do DAP Intercoms Work?
As the name implies, the Delivered-at-place simply means delivering all the goods at an agreed-upon location by both buyer and seller. The DAP terms require both buyer and seller to agree upon the place of destination, and it is applicable for any mode of transport that can include more than one form of transport.
In DAP Incoterm, the seller is responsible for delivering goods, including export approval, documentation, packaging, loading charges, and delivery. If you are a seller, under the DAP Incoterm conditions, you are not required to unload goods unless this term is specified.
On the other hand, if this condition is not specified, all the tasks and terms of unloading at the chosen destination are on the buyer you have sold your goods to.
These responsibilities include the entire local and importing charges, import duties, taxes, etc. This means that the buyer takes on all the financial responsibilities at the point of delivery.
Being a seller, you will need to take all the responsibilities and agree to suffer any potential losses and pay all the charges of moving goods to the specified location.
Looking at this fact, you should consider all the pros and cons of DAP incoterms.
What Are the Responsibilities of Both Parties in Dap Incoterm?
Although all the major points regarding buyers and sellers are mentioned previously, here are the major responsibilities of buyer and seller individually so you can make a clear decision:
Responsibilities of a Buyer:
As a buyer, you will have the following responsibilities if you decide to go for D-A-P incoterms:
- You will be responsible for all the importation costs that are associated with the shipment.
- When the goods reach their destination, there is going to be a custom examination that you will have to pay for.
- All the costs associated with unloading the cargo are also going to be paid for by you. Once the cargo arrives at the desired location, usually a warehouse, you will have to pay the unloading charges.
Responsibilities of a Seller
As a seller, you will have the following responsibilities if you decide to go for DAP incoterms:
- You will have to prepare the cargo, including packaging, so it can be delivered.
- At the seller’s warehouse, you need to pay all the charges associated with loading the goods.
- Pay all the charges associated with transporting the cargo or goods to the place of delivery.
- Look after all the customs clearance, export duty, and taxes that are associated with exporting the cargo.
- You are also responsible for the OTHC (Original Terminal Handling Charges) and DTHC (Destination Terminal Handling Charges).
What Are Potential Issues for the Seller?
The only potential issue that the seller may face is being responsible for any kind of damage or loss to the shipment. Since the buyer is responsible once the goods reach their destination, the seller is only responsible for paying the loss if anything goes wrong in between.
What Are Potential Issues for the Buyer?
There are no such potential issues for the buyer except for the seller arranging transportation charges for the buyer. This may result in making the buyer pay relatively high charges for transportation when arranged by the seller as compared to the buyer arranging the transportation of the shipment himself.
How to Avoid Misunderstandings While Using DAP Services:
When you finally decide to go for DAP shipments, you will have to make a few things clear to avoid misunderstandings between you and the other party throughout the shipment process. Here are the major points to look after:
- Either as a buyer or a seller, you will need to agree on the point of destination as clearly as possible. This needs to be written on the contract to avoid any kind of conflict.
- The delivery timeframe should be decided by both parties and agreed upon
- If you are a seller, you need to notify the arrival of goods with sufficient time in hand.
- Before arrival, you will need to provide all the necessary documents as a seller.
- Both parties need to agree on a reasonable clearance period.
- In any case of dispute, agree beforehand on who will pay for any detention, demurrage, and storage.
- Both the parties need to agree upon who will pay the extra charges to avoid any kind of conflict in the near future.
Difference between DAP and DDP:
Here are the major differences between DAP and DDP:
|The full form of DAP is Delivered to place.||The full form of DDP is Delivered Duty Place.|
|The buyer is responsible for customs clearance, duties, taxes, and unloading.||The buyer is only responsible for unloading.|
|In DAP, the risks and responsibilities of the seller are only until the cargo reaches the buyer’s destination.||In DDP, the full responsibilities and risks are associated with the seller until the end.|
Who Pays DAP Freight?
According to the DAP incoterm agreement, all the freight charges are to be paid by the seller. The buyer is not responsible for any charges except unloading the shipment and import charges once it reaches the desired location.
Is Custom Clearance Included in DAP?
Customs clearance is included in DAP. However, the import customs clearance is the responsibility of the buyer, while the export customs clearance is the responsibility of the seller. In simpler words, the ownership is transferred from the seller to the buyer at the destination.
What Are the Pros and Cons for the Buyer in DAP Incoterm?
If you are a buyer, here is a list of pros and cons that you can face using DAP shipments:
- If there are any additional charges during the shipping process, the seller has to look after them, and the buyer is absolutely not responsible.
- When it comes to packaging and marking of the goods, there is no obligation on the buyer. The seller is supposed to pack the goods with own cost.
- There is no responsibility of insurance of goods on the buyer. All the risks and losses are associated with the seller until the goods are delivered.
- The contract of carriage is also to be carried by the seller and not the buyer.
- DAP also helps buyers to manage inventory and cash flow, especially in cases of reoccurring orders.
- DAP can lead to delays sometimes, which may result in keeping the buyer waiting for long.
- In case of detention, dunnage, delays, the costs are on the buyer, and the seller is not responsible for paying extra charges.
- If required by the country of import, the buyer has to carry out all the payments for licenses and permits for import, security clearance, etc.
What Is the Difference between DAP and CIF in Shipping Terms?
Here are the major differences between DAP and DDP:
|There are no insurance obligations for any parties in DAP.||The seller is responsible for paying minimum insurance coverage in CIF shipping terms.|
|DAP incoterms are fit for any kind of transport without any limitation.||The transport choices in CIF incoterms are limited to maritime and inland transport only.|
|While using DAP incoterm services, the seller is responsible for delivering goods to a certain location.||In CIF incoterms, the seller is responsible for delivering the goods to the port of destination.|
Is DAP the Same as DDU in Shipping Terms?
In old terms, the DDU is practically the same as DAP having a full form of Delivered Duty Unpaid. Similar to DAP, the DDP also makes the seller responsible for delivering the goods at the said location in the country of importation.
The DAP rules were introduced in Incoterms-2010, which has basically replaced three terms, including DES, DAF, and DDU.