The DAP Incoterm, short for Delivered at Place, is one of the 11 Incoterms coined by the ICC to ease international trade. Under the DAP trade terms, the seller must pack, clear the goods, and transport them to a designated place. In this guide, you will learn all about the DAP Incoterm from 2020 and get ready to ship your cargo more effectively.
The DAP Incoterm 2020 is the replacement of the former DDU (Delivery Duty Unpaid). While they still have the same meaning, DDU is only used colloquially now. The DAP Incoterm can be used for all types of transport, including those involving multiple modes of transport.
When shipping under DAP trade terms, both parties must agree on the named place or designated location where the delivery will take place. This is where the risk will transfer from the seller to the buyer; once the goods are made available at this location. In most cases, the buyer names a place for the goods to be delivered in the country of destination, which can be a depot, a hub, or their own premises.
For international shipments under DAP, the seller must pack the goods, clear them for export, load them on the selected vessel or vehicle and transport them to the designated location. The buyer is then responsible for clearing the goods for import, unloading the goods at the designated location, and any subsequent domestic transport.
When shipping under DAP Incoterm, the seller pays for transport costs. The seller is responsible for arranging the freight service from their location until the designated point of delivery.
The buyer is the one that names the designated location, and he is also responsible for unloading the goods once they arrive. This is the main difference between the DAP and the DPU (Delivery at Place Unloaded), in which the seller also covers unloading.
For example, an Irish company (the seller) sells 100,000 units of merchandise to a US buyer under the DAP shipping terms. The US buyer selects their warehouse address in the state of Virginia as the designated location.
DAP CUSTOMS CLEARANCE
When using DAP for importing and exporting, the seller must cover all export duties and taxes and prepare the necessary documentation. They also have to prepare the goods for inspection at the country of origin.
In the destination country, the buyer must cover all import expenses, including duties, taxes, VAT and customs clearance.
DAP shipping terms are often used when there are no customs between the countries, for example, when shipping between two EU countries. Another situation where it is recommended for the seller to use DAP trade terms instead of DDP is when they are not familiar with import clearance procedures at the country of destination.
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