What Is the Incoterm DAP (Delivered At Place)?

DAP is an international trade term that describes an agreement where the seller agrees to take on a majority of the transport responsibility. Under the DAP incoterm, sellers have to cover all costs and assume liability for the goods until they are delivered to a specified location in the destination country. Unlike in DPU (Delivered at Place Unloaded), using DAP does not require the seller to unload the goods at this point.

Key features of DAP

Here are the core features of the DAP incoterm:

Seller’s responsibilities under DAP

The seller is responsible for the majority of the transport under DAP rules. They must prepare and mark the goods for export, obtain the required licenses, and take care of all export formalities. They must prepare the commercial invoice and arrange for pre-carriage to the terminal. 

The seller also has to arrange for the main transport to the destination country, covering pre-shipment inspection charges, and onward carriage to the agreed-upon place. This includes covering all loading costs until the final point. In addition, the seller must provide proof of delivery after the goods reach the destination.

Buyer’s responsibilities under DAP

Once the goods reach the agreed-upon destination, the buyer is responsible for unloading them. They must pay for the goods as mentioned in the trade agreement. Although the seller arranges for transport to the named location, the buyer is responsible for import duties, taxes, customs clearance, and pre-shipment inspection charges (for import clearance).

If the agreed-upon location is not the final point of delivery, the buyer has to arrange and pay for further transportation.

Point of delivery and risk transfer

The seller must cover all costs and assume responsibility for the goods until they are made available at the agreed-upon location. From unloading the goods at that point to the final delivery location, the buyer assumes all costs and risks.

Advantages of DAP

Benefits to the seller

• Simplified logistics planning with no buyer involvement

• Flexibility to choose the most appropriate carriers, minimizing seller costs

• No responsibility to unload goods at the agreed-upon point

• No requirement to provide insurance for the transport

• Clear demarcation of responsibility to the point of delivery at the agreed-upon location

• Simplified payment verification with a clear point of fulfillment

Benefits to the buyer

• Minimal involvement in logistics planning, maximizing convenience

• Bearing no responsibility for the goods until delivery at the agreed-upon point

• Improved cost clarity with clear delineation of responsibility

Disadvantages of DAP

Challenges for the seller

• Potential transport complications, having to navigate the majority of the logistics

• Bearing responsibility for the goods until they reach the agreed destination point

• Handling all export documentation, taxes, and duties

Challenges for the buyer

• Managing unloading at the point of delivery

• Potential for inflated costs with no control over logistics

• Handling all import documentation, taxes, and duties

When to use DAP

DAP is suitable for multimodal transport requiring complex logistics. It increases efficiency by centralizing responsibility with the seller. Sellers can opt for this incoterm when they prefer to handle the entire logistics and have a robust infrastructure.

Buyers often choose this incoterm when they wish to minimize administrative burden and associated risk. Buyers with little to no logistics experience often find DAP beneficial.

FAQ

What is an example of DAP shipping?

A buyer in Los Angeles, California enters into a DAP agreement with a seller in Seoul, South Korea to purchase electronic components. The Port of LA is the mutually agreed delivery point. In this arrangement, the seller must arrange and pay for the transport of goods from their warehouse to the Port of LA.

Once the goods arrive at the port, the responsibility is transferred to the buyer who may then arrange for any further transportation.

Who pays duty in DAP incoterm?

Under DAP, the buyer is responsible for paying any import duties, taxes, and customs fees upon arrival of the goods at the named place. The seller handles the export duties and other formalities.