DDP VS DAP VS DAT VS DDU Shipping Terms (Meaning, Comparison, and Uses)
Your responsibilities and risks in every shipment transaction vary depending on the terms that you use. Find out about the subtleties of the “D” Incoterms® in this article.
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The International Commerce Terms, more popularly known as Incoterms®, is a set of commonly used agreements in the foreign shipping scene. They are standardized globally, and they define the obligations, fees, and risks that you will bear in any shipment. Some of the most popular Incoterms are DDP, DAP, DAT, and DDU, which you will know in detail in the rest of this article.
DAP (Delivered At Place)
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.
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.
DAT (Delivered At Terminal)
The Incoterm DAT (Delivered At Terminal), updated in the Incoterms® 2020 as DPU (Delivered At Place Unloaded), is highly similar to the Incoterm DAP. Under this agreement, the seller is responsible for all the costs and obligations present in bringing the cargo to the named destination, as well as the unloading of the goods from the vessel.
As with the general “D” Incoterms rules, the buyer only takes over the costs and risks after the cargo is delivered and unloaded at the terminal. The buyer is also responsible for the import clearances and payment of taxes and duties.
If you are a buyer, it’s a good choice to use DAT when you are prioritizing the reduction of the risks that you have to bear. This is because you only need to take over from the defined place of destination. However, note that the freight charges may be included in the pricing of the goods, which translates to steeper costs for the buyer.
DDU (Delivered Duty Unpaid)
You might be surprised to learn that the Incoterm DDU (Delivered Duty Unpaid) is not part of the Incoterms® 2010 and 2020. However, it remains one of the commonly used agreements in international shipments. DDU is replaced by DAP and DAT, which cover most of the functions of the said Incoterm.
Under DDU, the seller must deliver the freight to the buyer’s specified destination at their expense. All costs until the cargo reaches the final place will be borne by the seller. Once delivered, the buyer takes over and is responsible for the import charges, taxes, duties, and all other expenses thereafter.
DDP (Delivered Duty Paid)
Quite intuitively, it’s easy to notice that the Incoterm DDP (Delivered Duty Paid) is highly similar to DDU—they only differ in terms of the import process and payments of taxes and duties. Under this Incoterm, the only responsibility of the buyer is the unloading of the cargo and its charges. If they choose to transport the goods further, the buyer is also liable.
According to the ICC, the usage of DDP is excellent when delivering containerized freight. This Incoterm highly favors the buyer, so unless the seller is familiar with the destination country’s customs processes, they are likely to refuse using DDP.
The “D” Incoterms are often used when the seller has the capacity to pay for the majority of the costs incurred in the shipment. Commonly used ones under this category are DDP, DAP, DAT, and DDU. If you are shipping from China using any of these Incoterms, working with a reliable freight forwarding company like ZGGShip would be your best decision.