DAP Incoterms

When it comes to international shipping, DAP (Delivered at Place) Incoterms clearly define who is responsible for each step of the shipment, from packaging and transport to customs clearance and final delivery. This guide outlines the duties of both the seller and the buyer, as well as the pros and cons of using DAP in global trade.

Under DAP, the seller is responsible for the shipment until it arrives at the buyer’s designated location.

1. Preparing Goods for Export
The seller must properly package the goods to ensure safe international transportation. This includes using materials and methods that protect the products during handling, transit, and terminal storage.

2. Loading at the Seller’s Warehouse
Costs for loading the goods onto the truck at the seller’s premises are usually referred to as loading charges. While these are often paid by the buyer, this may vary depending on the contract.

3. Transport to the Export Port
The seller arranges and pays for the transportation of goods to the export port or terminal.

4. Legal Requirements for Export
The seller must handle all export formalities, including customs clearance and payment of any export duties or taxes, to legally move the shipment out of the country.

5. Origin Terminal Handling Charges (OTHC)
OTHC refers to the costs of handling the goods at the port of origin (e.g., container loading and port documentation). These fees are the supplier’s responsibility.

6. Main Transportation and Delivery
The seller must:

• Cover the costs of the main transport (e.g., sea or air freight)
• Pay for Destination Terminal Handling Charges (DTHC) when the shipment arrives
• Arrange final delivery to the agreed-upon location (e.g., the buyer’s warehouse or bonded facility)

Once the shipment reaches the destination, the buyer takes over the remaining responsibilities.

1. Final Delivery and Unloading Costs
The buyer is responsible for unloading the shipment at the final destination, including any associated labor or equipment costs.

2. Customs Clearance and Import Duties
The buyer must manage all import-related requirements, including:

• Clearing the shipment through customs
• Paying import duties, VAT, or taxes
• Covering the cost of any customs inspections, if applicable

Advantages of DAP for Buyers

• Clear Cost Breakdown: DAP outlines who is responsible for each shipping cost, which helps with budgeting and logistics planning.
• Reduced Risk: The seller bears all transport risk until the goods arrive at the buyer’s location.
• Cash Flow Management: Buyers only pay for the goods upon arrival, which helps avoid tying up funds in transit.
• Use of Bonded Warehouses: Sellers can pre-position goods in bonded warehouses near the buyer, enabling fast and flexible fulfillment.

Disadvantages of DAP for Buyers

• Potential Delays: Customs clearance or inspection at the destination can cause delays.
• Storage and Handling Costs: The buyer may incur additional fees for detention, dunnage, or storage if the shipment is held up.
• Higher Overall Cost: Relying on the seller for logistics may be more expensive than using a buyer’s own freight forwarder or logistics partner.
• Seller Risk: If the buyer refuses to pay import duties, the seller may suffer losses. As a result, sellers might request higher deposits or charge more for shipping.