Historical Context
DAP (Delivered At Place) is one of the Incoterms (International Commercial Terms), which are a series of predefined commercial terms published by the International Chamber of Commerce (ICC). Incoterms were first introduced in 1936 to provide clarity in international trade and reduce confusion over contractual obligations between buyers and sellers. DAP was introduced in the Incoterms 2010 and continues to be a widely used term in the Incoterms 2020 edition.
Explanation
DAP stands for “Delivered At Place,” indicating that the seller fulfills their delivery obligation when the goods are placed at the disposal of the buyer at the designated destination. The seller bears all risks and costs associated with transporting the goods to the specified location, excluding any import duties, taxes, or other official charges payable upon import. The buyer is responsible for unloading the goods and handling import clearance.
Key Responsibilities
Seller’s Responsibilities:
- Arranges and pays for transportation to the agreed destination.
- Bears all risks associated with transportation to the delivery point.
- Provides necessary documentation for the buyer to take delivery.
- Assists in obtaining any required import licenses, at the buyer’s expense.
Buyer’s Responsibilities:
- Unloads the goods at the delivery destination.
- Completes import clearance and pays any related duties and taxes.
- Assumes all risks and costs after the goods are placed at their disposal at the destination.
Chart in Mermaid Format
Here is a simple workflow illustrating DAP responsibilities in Mermaid format:
graph TD
A[Seller's Premises] -->|Transport Costs & Risks| B[Destination]
B -->|Place at Buyer Disposal| C[Buyer's Premises]
C -->|Unloading, Import Clearance| D[Final Delivery]
Importance and Applicability
DAP is crucial in international trade as it clearly delineates the point at which risk transfers from the seller to the buyer. This term is applicable in scenarios where the seller is able to manage the transportation process to the buyer’s designated location, ensuring efficient and timely delivery. DAP is commonly used in various industries, including manufacturing, retail, and wholesale, where control over the delivery process is critical for supply chain management.
Examples
-
Electronics Manufacturer Shipping to a Retailer: An electronics manufacturer in China agrees to sell and deliver goods to a retailer in the United States under DAP terms. The manufacturer arranges and pays for the transport of goods to the retailer’s warehouse in California. Upon arrival, the retailer handles the unloading and customs clearance process.
-
Automotive Parts Supplier: An automotive parts supplier in Germany ships products to a buyer in Brazil under DAP terms. The supplier takes care of all logistics and transportation costs to the buyer’s facility in São Paulo. The buyer is responsible for unloading the parts and paying import duties and taxes.
Considerations
- Transport Risk: Ensure appropriate insurance is in place as the seller bears the risk until delivery.
- Documentation: Accurate documentation is necessary for smooth customs clearance.
- Communication: Clear communication between buyer and seller is vital to avoid misunderstandings regarding delivery locations and import procedures.
Related Terms
- EXW (Ex Works): The seller’s responsibility ends when the goods are made available for pickup at their premises.
- FOB (Free On Board): The seller’s responsibility ends once goods are loaded onto the shipping vessel.
- CIF (Cost, Insurance, and Freight): The seller pays for cost, insurance, and freight to the port of destination, but risk transfers once goods are loaded onto the ship.
FAQs
What does DAP include in terms of cost?
Who handles customs clearance under DAP?
References
- Incoterms® 2020 by International Chamber of Commerce (ICC)
- International Trade Administration
Summary
DAP (Delivered At Place) is a key term in international trade, providing clarity on the responsibilities of sellers and buyers regarding the delivery of goods. By defining the point at which the seller’s responsibility ends and the buyer’s begins, DAP helps facilitate smoother transactions and minimizes risks. Understanding DAP is essential for efficient supply chain management and successful international business operations.
