Shipping DAP Incoterms 2020

DAP Incoterms 2020 : A Few Quick Points

  • Delivered At Place (DAP) Incoterms can be used for all modes of transport and even when there are multiple modes of transport involved in transportation.
  • Risk transfers from seller to buyer when the seller delivers the goods to the agreed place
  • The seller must arrange for carriage to the agreed destination (named place)
  • The seller must pay for insurance costs to the agreed destination (named place)

When DAP is used in a contract, the named place is mentioned. For example, if a company in Malaysia is selling on DAP terms to a company in India and the seller has agreed to pay for transportation to the port in India – the sales contract should at least mention:

DAP (Chennai Port, India, Incoterms 2020)

Shipping DAP Incoterms: Delivery & Transfer of Risks

Delivery happens when the seller hands over the cargo to the buyer at the agreed place. In most instances this Incoterm is used when the delivery point is the buyer’s port or a point before the buyer’s warehouse. It must be noted that the point of delivery is not mentioned in the Incoterm, hence it is highly advisable to define the point of delivery as accurately as possible in the sales contract, as there may be conflicts in understanding between first carrier and/or main carrier.

… highly advisable to define the point of delivery as accurately as possible in the sales contract, as there may be conflicts in understanding …

Shipping DAP Incoterms: Insurance

There is no requirement for either the seller or the buyer to purchase insurance for the shipment.

Shipping DAP Incoterms: Carriage

The seller must arrange and pay delivery to the named place of the destination. The seller must abide by laws and meet all obligations relating to transport security regulations.

Shipping DAP Incoterms: Customs clearance

The seller must meet the obligations of export Customs clearance and the buyer must manage import Customs clearance. This would mean that respective parties responsible for export/import have to manage and pay for all formalities like licenses, security checks, inspections and other document submissions as required.

Shipping DAP Incoterms: Delivery/transport documentation

The seller must provide the buyer with related transport documents. The costs of providing such documents, original or otherwise will be paid for by the seller.

Shipping DAP Incoterms: Packaging & Marking

Seller must ensure and pay any costs related with ensuring that the cargo is delivered in acceptable condition. This would mean the seller has to pay for quality checks, weighing operations and/or counting etc. The seller must package the goods at the seller’s cost.

Shipping DAP Incoterms: Cost allocations

The allocation of costs between buyer and seller are as follows:

Buyer:

  • Any insurance cover requested
  • Any costs involved in obtaining documents for import clearance
  • Duties, taxes and other costs related to import
  • Any costs incurred due to a failure to give reasonable notice to seller when it is agreed that the buyer is allowed to choose the time for departure from origin or receiving at destination

Seller:

  • Transport and insurance costs to the named place
  • Transport security related costs
  • Cost of providing usual proof of delivery
  • Duties, taxes and other costs related to export
  • Any costs involved in obtaining documents for export clearance

Shipping DAP Incoterms: Notices

  • The seller must use the usual methods to notify the buyer that delivery has been made
  • The buyer must give the seller enough notice time to deliver the cargo at the buyer’s chosen time (if agreed that the buyer can choose the time)

What is the difference between DAP & DAT Incoterms?

In the latest version of the Incoterms, Delivery At Terminal (DAT) is no longer used.

We have a more comprehensive article on Incoterms 2020 that you can find here.

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