What is Delivered at Place (DAP)? Definition, Comparisons, Advantages, Disadvantages

What is Delivered at Place (DAP)? in logistics?

Delivered at Place (DAP) is an international trade term that falls under the Incoterms (International Commercial Terms) published by the International Chamber of Commerce (ICC). DAP was introduced in the Incoterms 2010 edition and has continued to be an important term in the latest Incoterms 2020 version.

In simple terms, DAP means that the seller is responsible for delivering the goods to a specified destination, usually in the buyer’s country. The seller bears all risks and costs associated with bringing the goods to the named place, except for import clearance and any applicable import duties or taxes.

What are the key points of DAP?

Like a roadmap for international shipping, these key points will illuminate the essential characteristics that make DAP a powerful tool in logistics management.

Delivery responsibility: The seller is responsible for arranging transportation and delivering the goods to the agreed-upon destination.
Risk transfer: The risk transfers from the seller to the buyer when the goods are made available for unloading at the named place of destination.
Cost allocation: The seller bears all costs up to the point of delivery, including transportation, export clearance, and any transit-related expenses.
Import clearance: The buyer is responsible for import clearance and payment of import duties and taxes.
Unloading: Unless otherwise agreed, the buyer is responsible for unloading the goods at the destination.

DAP vs. other Incoterms

To better understand DAP, it’s helpful to compare it with other commonly used Incoterms:

1. DAP vs. DDP (Delivered Duty Paid):
DAP: Seller is not responsible for import clearance and duties.
DDP: Seller is responsible for import clearance and duties.

2. DAP vs. EXW (Ex Works):
DAP: Seller arranges and pays for transportation to the destination.
EXW: Buyer is responsible for all transportation arrangements and costs.

3. DAP vs. FOB (Free on Board):
DAP: Seller is responsible for delivery to the final destination.
FOB: Seller’s responsibility ends when goods are loaded onto the vessel at the port of origin.

4. DAP vs. CIF (Cost, Insurance, and Freight):
DAP: Seller is responsible for delivery to the final destination.
CIF: Seller’s responsibility ends when goods are unloaded at the port of destination.

What are the advantages of using DAP?

Imagine a shipping method that simplifies complex international transactions while providing strategic benefits – that’s exactly what DAP offers to savvy businesses.

Clear division of responsibilities: DAP provides a clear understanding of who is responsible for what in the shipping process.
Simplified process for buyers: Buyers don't have to worry about arranging international transportation.
Control over transportation: Sellers maintain control over the shipping process, ensuring their goods are handled properly.
Flexibility in destination: DAP can be used for various modes of transport and destinations, including inland locations.
Reduced risk for buyers: Buyers don't assume risk until the goods reach the agreed-upon destination.

What are the disadvantages of using DAP?

Every shipping strategy has its potential pitfalls, and understanding DAP’s limitations is just as crucial as recognizing its strengths.

Higher costs for sellers: Sellers bear most of the transportation costs and risks.
Limited control for buyers: Buyers have less control over the transportation process.
Potential delays in customs clearance: If buyers are unfamiliar with import procedures, it may lead to delays.
Complexity in some countries: Import regulations can be complex in certain countries, making DAP challenging to implement.

When should businesses use DAP?

Selecting the right shipping term is like choosing the perfect tool for a specific job, and this section will help you determine when DAP is your ideal logistics solution.

When selling to new or inexperienced international buyers who prefer not to handle international shipping.
For shipments to countries with straightforward import procedures.
When sellers want to maintain control over the transportation process.
For high-value or sensitive goods that require careful handling during transit.
When negotiating contracts where the buyer prefers to handle import clearance and duties.

Example of DAP

Let’s consider a hypothetical case study to illustrate how DAP works in practice:

Company A, based in the United States, sells high-end electronics to Company B in Germany. They agree to use DAP terms with the delivery place specified as Company B’s warehouse in Munich.

Company A’s responsibilities:

Company B’s responsibilities:

In this scenario, Company A maintains control over the shipping process, ensuring their delicate electronics are handled properly. Company B benefits from not having to arrange international shipping while still managing the import process according to local regulations.

In summary, Delivered at Place (DAP) is an international trade term where the seller is responsible for delivering goods to a specified destination, bearing all transportation costs and risks, while the buyer takes responsibility for unloading and import customs clearance.