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What is Delivered at Place (DAP) incoterm?

Delivered at Place (DAP) means that the exporter is responsible for the costs involved in the shipping process. Learn more about its working and uses in the blog.

Building a successful business in the international market requires a clear understanding of various incoterms, which guide importers and exporters to complete hassle-free transactions. Incoterms are updated periodically by the ICC.

What is Delivered at Place (DAP) incoterm?

Delivered at Place means that the exporter is responsible for costs involved in the shipping process including packaging, unloading and potential losses that may emerge while moving goods to a specific location as decided in the contract. Under this arrangement, the importer’s role comes when the goods reach the specific location where the importer is required to pay any import duty along with other local taxes and clearance charges. DAP was introduced by the ICC in 2010, as a part of incoterms¹.

What is Delivered at Place Unloaded?

The process for Delivered at Place Unloaded is similar to the DAP process. The only difference is that under DPU, the exporter is expected to deliver goods unloaded. While under DAP, goods are delivered in a condition that they are ready for unloading.

How does Delivered at Place work?

DAP means that the exporter is ready to take risks and costs involved in the shipping process. The exporter is expected to hand over goods to the importer at an agreed-upon location. Once goods reach the location, the importer is expected to take responsibility from the point of delivery and handle unloading of goods².

Why is Delivered at Place used?

Delivered at Place can be used for any mode or intermodal shipment. It is commonly used for fragile goods or from markets that have uncertain conditions.

Obligations

Importers and exporters have defined obligations in the case of DAP. Some of the obligations of importers and exporters are as follows:

Exporter

Documentation

The exporter is expected to get required documentation in place for the shipment including commercial invoicing, packaging and any marking related to the export of the shipment.

Cost

The exporter needs to handle costs involved in the process of shipment and any losses that may occur during the shipment process.

Transportation

The exporter is expected to handle transportation of goods till the agreed-upon destination.

Licensing

The exporter is expected to obtain licenses in place for the shipment of goods. He is also expected to handle custom issues.

Importer

Payment

The importer is expected to make payment of goods to the exporter.

Import

The importer is expected to handle export formalities once goods have reached the agreed-upon destination. This includes filling out any import forms as required.

Unloading

The importer is expected to handle the unloading process from the shipping vessel.

Costs

The importer is expected to bear costs related to import duties and levies once goods have reached the agreed-upon destination.

Transport

Once the goods have reached the agreed-upon destination, the importer is expected to handle transportation to the final destination. These can be a warehouse, retail store, or storage facility.

Advantages and disadvantages of DAP

Advantages of DAP

Reliability

The exporter is expected to handle the process and related costs. So, it is a reliable type of contract.

Export customs

The exporter is expected to handle customs at the export port. The importer is expected to handle the import customs. It is a clear method where both parties are not relying on each other to handle local issues.

Cost-effective

The importer is only expected to pay for goods once they have reached the agreed-upon destination. So, this method is cost-effective for the exporter as well as the importer.

Disadvantages of DAP

Service

The exporter is expected to appoint a reliable freight forwarder. If the service is poor, there is a chance that goods received may be damaged in the shipping process.

Control

The exporter has control over the shipment process while the importer can only handle goods once they reach the agreed-upon destination.

Profit margin

The profit margin of an importer can be lower under DAP as the exporter incurs more risk in the process of shipment.

DAP is one of the most transparent methods of shipment. In any agreement, it is important for the two parties to discuss and finalize terms mutually to avoid hassles later.

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Frequently Asked Questions

What is the difference between DDP and DAP?

DDP is when the exporter is responsible for all costs and taxes associated with delivery of goods. In DAP, the importer is responsible for the unloading, packaging, labeling, freight, customs clearance, duties, and taxes.

What is the difference between DDU and DAP?

Often used interchangeably, DAP means that the importer is responsible for all duties, taxes, etc. and replaced DDU in 2010.

What is DAP in export?

Delivered at Place (DAP) means that the importer is responsible for all the duties, taxes, and clearance fees.

Are DDU and DAP the same?

Yes. DAP replaced the term delivery duty unpaid (DDU) in 2010.

What's the difference between CPT and DAP Incoterms?

Under DAP, the exporter is expected to handle the goods till the point of the agreed-upon location. However, in the case of CPT, the exporter transfers the liability soon after the goods are loaded on the vessel.

Published on January 29, 2023.

Sources:
1. https://www.ups.com/de/en/supplychain/insights/knowledge/glossary-term/delivered-at-place.page?#:~:text=What%20is%20Delivered%20at%20Place,the%20buyer's%20place%20of%20business).
2. https://www.investopedia.com/terms/d/delivered-place-dap.asp

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