What are DAP shipping terms(Meaning, ICC Definiiton, Terms of Scale)?
The Incoterm DAP (Delivered At Place) stipulates that the seller is tasked with delivering the goods to the buyer’s location at their expense. This means that after packaging the products for shipment, they will pay for the costs of transferring the freight from their warehouse to the final destination specified by the buyer.
Once delivered to the agreed-upon shipping point, the buyer takes over the risks and costs of unloading the goods and import customs clearance. While the Incoterm DAP allocates most of the shipping risks and expenses to the seller, the buyer also has set obligations in the shipment.
DAP delivery condition: When to choose DAP term
DAP applies to any kind of shipment — provided that both the buyer and seller agree to use the said Incoterm. If you are a buyer, you should note that choosing DAP usually results in higher pricing, since the risks and costs are under the seller’s name. Below are some scenarios where choosing the Incoterm DAP is highly beneficial.
The buyer defines the delivery location as their warehouse. This means that the buyer won’t need to pay other transportation costs in addition to unloading and import clearance fees.
The buyer is importing products into many countries. A good example of this is when you are importing into countries near each other. By choosing a strategic port between them, you can save money on freight fees in delivering the goods to each country.
The seller ships ample inventory to a bonded warehouse near the buyer. With the seller having inventory near the buyer, the buyer only needs to bear the costs of unloading and importing the products.
Buyer and seller responsibilities with DAP freight terms
Image Source: Incoterms Explained
Buyer’s responsibility under a DAP agreement
- Goods payment — this is to remunerate the seller for the manufactured goods and can vary depending on the agreed-upon conditions
- Unloading — bringing down the cargo from the transportation vessels once arrived at the named destination
- Importation — including the processing of import clearances, duties taxes, and other related costs
- Transport — if the buyer needs to move the goods somewhere apart from the named location, such as a warehouse
- Costs — all other costs incurred after the goods have been delivered to the agreed-upon destination
Seller’s responsibility under a DAP agreement
- Documentation — the processing of commercial invoices, Bills of Lading, etc.
- Preparation of goods — the packaging and labeling of the goods for export
- Licensing — acquiring the required licenses and handling certifications for the shipment
- Transportation — handling the pre-carriage (if any), export haulage, loading of the goods into the vessel, main delivery, and last-mile delivery
- Proof of delivery — a document presented by the seller to the buyer upon completion of delivery to the named place
- Costs — export duty, taxes, customs clearance, and all other costs incurred before the goods are delivered to the agreed-upon location
DAP shipping: Is it a good choice? (Example explained)
Let’s say that you are shipping from China, and you may have read about the DAP trade terms in Alibaba. One example—the named delivery location is the buyer’s warehouse—in their article demonstrates DAP’s ability to more flexible cash flow, since it’s possible that the buyer only needs to settle the payment after receiving the goods.
Another characteristic of DAP is that the buyer needs to handle the import process, which is different from other Incoterms under the “D” category, such as DDP (Delivered Duty Paid), where the buyers only need to handle the unloading of the cargo. Since it is one less task for the seller, DAP pricing may be lower than DDP.
DAP shipping from China
As a seller, you’d be handling a significant share of the costs and risks in transporting your cargo. Ensuring that your goods can be transported safely means that you can avoid expensive losses and the like.
Finding yourself a reliable freight forwarder from China is the best way to accomplish your deals, and ZGGShip is the top choice in this regard. With more than 15 years in freight forwarding, this company has the expertise and connections to give you quality shipments. To know more, visit ZGGShip’s website today.