Delivered at Place (DAP) Incoterm: Shipping Terms Explained

Delivered at Place (DAP) Incoterm 2020 for international freight shipping

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.

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Delivered at Place Incoterm: DAP meaning in shipping

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.

SHIPPING COSTS

Who pays for what when shipping under DAP?

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.

DAP Shipping: Seller’s responsibilities

  • Packaging the goods
  • Documentation and export clearance, including permits and taxes
  • Loading charges and origin terminal handling charges
  • Freight and shipping fees until the designated destination
  • Destination terminal handling charges

DAP Shipping: Buyer’s responsibilities

  • Designating the address for the delivery location
  • Unloading the cargo from the vehicle or vessel at the named place
  • Import clearance, VAT, permits and taxes at the country of destination
  • Inland transport and last-mile logistics

Example of DAP on international shipping

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.

  • The Irish company packs and clears the goods for export. They pay for loading the goods on a selected vessel as well as the shipping fees to the carrier.
  • When the merchandise reaches the US port, the buyer clears the goods for import and pays all documentation, duties and fees in the US.
  • The seller pays to get the goods unloaded from the ship onto a truck and transported to the named point in Virginia.
  • Once the cargo reaches the US company warehouse, the buyer pays for unloading the goods from the truck.

See other Incoterms for international transport

Are you looking for the right Incoterm for your cargo? Check other Incoterms to ensure you select the best-matching terms for your needs.

DAP CUSTOMS CLEARANCE

Customs clearance for DAP international shipments

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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FAQ: DAP Incoterm for international shipping

Who pays for insurance when using the Delivered at Place Incoterm from 2020?
When using DAP shipping terms, it is not mandatory for either the seller or buyer to purchase transport insurance, so the DAP shipping costs do not have to include insurance coverage.
However, because the seller is liable for the cargo until the goods reach the designated location, sellers often decide to add insurance coverage to their DAP deliveries. This is optional, and to avoid any miscommunication, both parties are advised to agree on the insurance terms before coming to a final agreement.
Who pays for unloading when shipping cargo with the DAP Incoterm?
The buyer is responsible for covering unloading costs at the designated location. The seller’s responsibility end once he makes the goods available for the buyer.
If the designated location for delivery is located inland and not at the port, the seller will have to cover the costs of unloading the goods from the ship and transporting it further to the depot.
Is shipping freight under the DAP Incoterm good for the buyer?
Using the Delivered at Place Incoterm from 2020 has advantages and disadvantages. From the buyer’s perspective, these are a few examples of when shipping under DAP can be a good choice:
  • The buyer is not familiar with the export procedures in the country of origin
  • The buyer does not have connections and negotiation power with freight companies for getting optimised quotes – if this is your case, Eurosender can help with that as we work with a vast network of freight forwarders to get you the best prices!
  • The seller agrees to ship inventory to a local bonded warehouse, which means the buyer gets faster and easier access to the goods under DAP
Does the DAP shipping cost include import duties?
No, when using the DAP Incoterm, the buyer must pay for any import or local taxes and fees incurred at the destination country. Buyers also must pay VAT.
Even though it is practical for the buyer to be responsible for the import costs in most cases, it can be the reason for shipping delays under DAP. If the designated location is a warehouse located inland, the seller is responsible for the international transport via sea freight and also the local delivery by truck. However, import procedures are normally carried out at the arrival port, which the buyer will have to be actively involved in, even though he is not responsible for the transport at this point.
What does it mean when Alibaba offers DAP shipping?
Alibaba, one of the most popular online retail sites, often uses DAP trade terms for its international deliveries. This means the Alibaba retailer will organise the shipping and clear the goods for export in China. When shipping under DAP with Alibaba, buyers will receive the goods at the named place of destination. The buyer will have to unload the goods, clear them for import and pay for any transportation charges to their final address.