When companies trade internationally, clear rules are essential to avoid confusion. Incoterms provide these guidelines, defining responsibilities for transportation, costs, and customs. One of the most common terms is DAP (Delivered at Place).

DAP Incoterms specifies the seller's responsibility to deliver goods to an agreed location, covering transportation and export clearance. The buyer handles import clearance, duties, and unloading. DAP helps both parties avoid disputes and ensures smoother transactions by clearly dividing responsibilities.

What are Incoterms?

Incoterms, short for "International Commercial Terms," are standardized rules developed by the International Chamber of Commerce (ICC) that define the responsibilities of sellers and buyers in international trade transactions.

First published in 1936, Incoterms are updated periodically to reflect changes in international trade practices, with the most recent version being Incoterms 2020. These terms establish a common language for traders, clarifying responsibilities for transportation, costs, import/export clearance, risk transfer, and insurance.

Incoterms are separated into four categories (E, F, C, and D) based on the increasing level of responsibility for the seller. The categories are:

  • E-terms: Minimal obligation for the seller (EXW - Ex Works)
  • F-terms: Main carriage not paid by the seller (FCA, FAS, FOB Incoterms)
  • C-terms: Main carriage paid by seller (CFR, CIF, CPT, CIP Incoterms)
  • D-terms: Delivered terms with maximum obligation for the seller (DPU, DAP, DDP Incoterms)

What is DAP Incoterms?

DAP (Delivered at Place) is one of the "D" category Incoterms, which means it places significant responsibility on the seller. Introduced in Incoterms 2010 and carried forward in Incoterms 2020, DAP replaced the older terms DAF, DES, and DDU.

DAP applies to all transport modes (sea, air, rail, road). It is particularly popular for door-to-door shipments where the seller wants to maintain control over most logistics processes but doesn't want to handle customs clearance at the destination.

What Does DAP (Delivered at Place) Incoterms Mean?

DAP means "Delivered at Place." Under DAP Incoterms, the seller is responsible for delivering the goods to a named place of destination, ready for unloading. The goods are considered delivered when placed at the buyer's disposal on the arriving means of transport and ready for unloading at the named destination.

With DAP, the seller handles transportation, export clearance, and all costs up to the delivery point, while the buyer is responsible for import clearance and unloading.

DAP Incoterms: What are the Seller's Responsibilities?

The seller has several responsibilities under DAP terms:

  • Goods and Invoice: The seller must supply the goods and the commercial invoice required by the contract of sale.
  • Export Packaging and Marking: The seller is responsible for ensuring the goods are properly packaged and marked for export.
  • Export Clearance: The seller obtains the export license (if needed) and manages all export formalities.
  • Transportation Costs: The seller covers all transportation costs to the named destination, including pre-carriage and main carriage.
  • Risk and Delivery: The seller assumes responsibility for the goods and the risk of loss or damage until delivery is made at the agreed destination. The seller must also provide notice of arrival.
  • Proof of Delivery: The seller must provide proof of delivery, such as a transport document, to allow the buyer to take delivery of the goods.

DAP Incoterms: What are the Buyer's Responsibilities?

Under DAP terms, the buyer's responsibilities are more limited but still significant:

  • Payment: The buyer must pay for the goods outlined in the contract.
  • Import Clearance: The buyer handles all import procedures and pays any associated duties, taxes, and charges.
  • Unloading: The buyer covers the cost of unloading the goods at the destination.
  • Risk: The buyer assumes responsibility for the goods once they are delivered to the named place.
  • Notice & Proof of Delivery: The buyer informs the seller about delivery details and accepts the seller's proof of delivery.
  • Inspection Costs: The buyer pays for any pre-shipment inspections unless required by the exporting country.

Examples of DAP Incoterms

Here are three practical examples to illustrate how DAP works:

Example 1: German Machinery to Brazil

Say a German manufacturer sells industrial machinery to a Brazilian company under DAP terms with the São Paulo factory as the named place.

  • The German seller arranges and pays for all transportation from their factory to the buyer's location in São Paulo
  • The seller handles export clearance in Germany
  • The buyer is responsible for import clearance and pays all import duties and taxes
  • Risk transfers to the buyer when the truck arrives at the factory gate before unloading occurs

Example 2: Chinese Electronics to USA

Suppose a Chinese electronics manufacturer ships products to a US retailer under DAP terms, the process works as follows:

The named place is the retailer's distribution center in Chicago. The Chinese seller handles all transportation costs from their factory to the final destination, including ocean freight to Long Beach and rail transport to Chicago.

  • The seller handles export clearance in China
  • The US retailer must complete import clearance and pay all duties and taxes
  • Risk transfers when the goods arrive at the Chicago distribution center
  • The retailer is responsible for unloading the goods from the rail car

Example 3: Italian Furniture to Canada

Say an Italian furniture manufacturer selling to a Canadian retailer under DAP terms will deliver to the retailer's Toronto warehouse.

The Italian seller arranges and pays for all transportation from their factory to the Toronto warehouse, including ocean freight to Montreal and trucking to the final destination.

  • Export clearance is handled by the seller in Italy
  • The Canadian retailer takes care of import clearance and pays all duties and taxes
  • Risk transfers when the truck arrives at the warehouse in Toronto
  • The retailer handles and pays for unloading the furniture from the truck

DAP Incoterms: Cost Implications for Buyers and Sellers

Costs for Sellers

  • Export and Loading Costs: The seller covers export packing, marking, loading at origin, and pre-carriage transportation to the main carrier.
  • Export Clearance and Terminal Handling: The seller is responsible for export licenses, formalities, and terminal handling at the origin and destination.
  • Main Transportation and Insurance: The seller bears the cost of the main carriage to the destination and may arrange insurance to cover their risk.
  • Delivery Charges: The seller covers transportation from the destination terminal to the named place, including any delivery charges.

Costs for Buyers

  • Import clearance: The buyer pays for import licenses, formalities, and customs clearance.
  • Import duties and taxes: The buyer bears all duties, taxes, and other official charges.
  • Unloading at destination: The buyer pays for unloading from the arriving means of transport.
  • Onward transportation: The buyer bears any transportation costs after the delivery point.

Cost Comparison with Other Incoterms

  • DAP vs. EXW: DAP places much more on the seller than EXW, where the buyer bears almost all costs.
  • DAP vs. FOB: DAP includes significantly more costs for the seller, as FOB only requires the seller to deliver goods on board the vessel.
  • DAP vs. CIF: DAP goes further than CIF by requiring the seller to pay for carriage to the named destination, not just the destination port.
  • DAP vs. DDP: DAP requires less from the seller than DDP, as DDP Incoterms requires the seller to handle import clearance and pay import duties.

DAP Incoterms offer a clear structure for international trade, specifying the responsibilities of both buyers and sellers. By defining who handles transportation, customs clearance, and delivery costs, DAP minimizes misunderstandings and helps streamline the trading process. Understanding these terms is crucial for businesses engaged in global trade, as it helps avoid unexpected costs and simplifies operations. Knowing your responsibilities under DAP can lead to more efficient and smoother transactions in international trade.

Frequently Asked Questions

1. When to Use DAP Incoterms?

DAP Incoterms are ideal when the seller manages shipping to the destination, but the buyer handles local import clearance. It's also suitable for unfamiliar markets, high-value goods, and countries with complex import regulations.

2. What are the differences between DAP vs. Other Incoterms?

DAP vs. EXW (Ex Works):

  • EXW: Minimal seller responsibility; buyer arranges everything from pickup at seller's premises
  • DAP: Seller handles almost everything up to delivery at the destination

DAP vs. FOB (Free On Board):

  • FOB: Seller delivers goods on board the vessel; risk transfers when goods cross the ship's rail
  • DAP: Seller delivers to the named destination; risk transfers at destination

DAP vs. CIF (Cost, Insurance, and Freight):

  • CIF: Seller pays for shipping to the destination port and insurance; risk transfers when goods are loaded on the vessel
  • DAP: Seller pays for shipping to the final destination; risk transfers at destination

DAP vs. DPU (Delivered at Place Unloaded):

  • DPU: Seller delivers and unloads at the named place
  • DAP: Seller delivers to the named place, but buyer unloads

DAP vs. DDP (Delivered Duty Paid):

  • DDP: Seller handles everything, including import clearance and duties
  • DAP: Seller handles everything except import clearance and duties

3. What are the key components of DAP Incoterms?

DAP involves the delivery point where risk transfers, the seller's responsibility for transport, cost allocation, and export clearance. The buyer handles import clearance and unloading.

4. What are the benefits of using DAP Incoterms in international trade?

DAP simplifies logistics for buyers, offers control for sellers, and ensures clear cost and risk division. It also allows flexibility across transport modes and uses local expertise for import procedures.

5. How does DAP Incoterms affect the logistics and delivery process?

DAP requires the seller to manage transportation, choose carriers, and handle export documentation. The buyer is responsible for import clearance, unloading, and smooth delivery.