Incoterms (International Commercial Terms), a set of standard shipping terms, are widely used in international trade to clarify the obligations of the buyer and the seller concerning the delivery of goods. DAP incoterm is one of the primary terms you should know. In this article, we will go through a comprehensive list of information about DAP freight terms for you.
- What does DAP mean in shipping?
- How do DAP freight incoterms work?
- What are DAP shipping liabilities for the buyer and seller?
- What is DAP terms insurance for buyers and sellers?
- What is the DAP charge for shipping?
- Why should to use DAP delivery terms？
- When should you choose it?
- What is the difference between DAP vs. DDP and CIF?
- Where to get more shipping incoterms information?
What does DAP mean in shipping?
DAP term, also known as Delivered at Place, is used to define the delivery of goods from the seller to the buyer. Under DAP shipping terms, the seller is responsible for delivering the goods to a specific destination without unloading the cargo. The buyer will take responsibility for unloading and any further transportation costs beyond that point.
How do DAP freight terms work?
DAP meaning in shipping presents the seller taking all the risks and costs of cargo transportation to an agreed-upon location. The delivery location of the DAP term can be either at the designated place on the border or a given point inland of the importing country and more.
To let you understand more directly, below is an example of DAP shipping terms:
Suppose a company in Germany wants to sell machinery to a company in Australia. The specific place of delivery is the port of Sydney. The German company will pack, label and find a shipping agent to deliver the machinery to the port of Sydney.
The Australian company is then responsible for unloading the machinery from the ship and transporting it to their place of business. Any costs incurred for customs clearance, duties and taxes, and any further transportation beyond the port of Sydney will be the responsibility of the Australian company.
What are DAP shipping liabilities for the buyer and seller?
Let us explore the responsibilities between seller and buyer under DAP delivery terms.
With shipping DAP terms, the seller is responsible for ensuring the goods can be exported successfully and providing any documentation needed. Such as a commercial invoice, bill of lading, etc. For the buyer, if the seller has asked for help to provide any paperwork or information, the buyer shall cooperate to make the goods can transport smoothly.
As per DAP term regulation, the seller’s obligations lie till the specific destination. It means that the delivery of goods is considered complete when the cargo shipment arrives at the buyer’s agreed place of disposal.
The seller will load the goods and deliver them to the named terminal point. Though the seller does not need to unload the shipment, they should guarantee that the cargo is available for unloading according to the DAP shipping terms. On the opposite, the buyer is answerable for unloading goods at the designated country point, then inland transit for the cargo to his own warehouse or final destination.
Duty and customs clearance
DAP term requires the seller to take responsibility for securing custom clearance while the buyer prepares needed documentation to assist the seller. The seller will carry out export customs and related duties.
In DAP freight terms, the buyer should obtain the licenses or another official authorization required for entry customs and carry out all import customs programs. It also will take all risks and expenses after the seller has finished the cargo delivery.
Of transfer of risks
After the seller has delivered the cargo at the designated destination port, the risks will transfer to the buyer. In other words, the buyer bears all risks and costs after delivery to the named destination depending on DAP incoterm.
It is a fundamental need to know the shipping liabilities for the buyer and seller when you choose to use a DAP shipping incoterm or others. So that you can select a suitable shipping term for your business. To get efficient transporting strategies, you can link with the Airsupply team. It will offer exclusive support for helping your cargo ship overseas based on the incoterm you need.
What is DAP incoterms insurance for buyers and sellers?
The DAP incoterm rules specify the responsibilities of the buyer and seller in international trade transactions, but without addressing the insurance issue directly. Shipping with DAP freight terms, the seller has no obligation to provide cargo insurance for the buyer during transit.
But since the seller is in charge of the entire transportation risk during DAP shipping, it is recommended seller to obtain insurance to avoid the risk of cargo loss or damage. Furthermore, the specific insurance coverage details should be agreed upon by both parties in the sales contract. Buyers and sellers should consult with their respective insurance providers to determine the appropriate type and amount of coverage needed for their specific transaction.
What is the DAP charge for shipping?
The DAP charge in shipping refers to the cost of delivering the goods to the designated location, as specified in the sales contract between the seller and the buyer. DAP costs typically include transportation freight (Eg. air freight, sea freight, trucking, etc.), as well as any associated fees such as customs duties and taxes.
The exact DAP charge for shipping will depend on various factors as the origin and destination of the shipment, the type of goods, the transportation mode, etc. Please note that the cost of DAP shipping is just one component of the total freight charge. And the buyer may also be borne by additional fees beyond the DAP terms.
Who pays the shipping fee?
Working with DAP shipping terms, the seller will pay for the transportation costs associated with delivering the goods to the designated location. Such as loading fees, Origin Terminal Handling Charge (OTHC), customs clearance charges for export, etc.
On the contrary, the buyer is answerable for the charge levy after the risk transfer based on DAP incoterm. The buyer pays for any costs incurred for import customs clearance and shipping or handling fees beyond the delivery point. Such as demurrage freight, port charges, and more.
It’s important to note that the responsibility for paying the DAP shipping charges may vary based on the specific terms agreed upon between the seller and the buyer in their sales contract. The DAP terms of the agreement should be clearly defined and understood by both parties to avoid any misunderstandings or disputes regarding the payment of DAP charges.
Why should to use DAP delivery terms？
DAP delivery has distinguished the responsibility for the shipping of the goods between buyer and seller. With reduced buyer risk, DAP incoterms offer minimum liability options and extensive agreements for buyers who wish to assume less shipping risk.
In addition, the buyer has the flexibility to arrange for the transportation of the goods beyond the agreed location, which may be more cost-effective or convenient. Hence, the DAP shipping term is a beneficial incoterm for buyers/importers.
But the seller would face that the buyer refusing to pay the import customs duties will cause a risk of losing the cargo. What’s worse, if the goods are failed to clear customs as the complexity of handling, it could lead to delivery delays. So when choosing DAP freight incoterm, it’s critical to consider carefully and define the DAP terms of the agreement.
To familiarize DAP freight instantly, you can consult and work with a reputable freight forwarder who has insight into various incoterm. Such as Airsupply, a senior freight forwarder experienced in international shipping for more than ten years. It will ensure custom clearance and cross-border transportation to make you receive the goods hassle-free.
When to choose DAP shipping terms?
Delivered at Place shipping may be a suitable option in the following situations:
Shipping the goods to a designated location
If the buyer has specific requirements for cargo shipping, the DAP delivery term allows the seller to ship the goods to the location. Such as delivery inventory to a local bonded warehouse, factory, port, etc.
Reducing transportation costs
In DAP shipping, the buyer will take responsibility for the freight beyond the agreed destination. If the buyer has more favorable local carriers, it can result in shipping cost savings.
Anytime a buyer wants to work with DAP transactions, he must negotiate with the seller. The destination should be well-defined and has specific timelines to guarantee the seller makes an effort to prevent delivery delays.
What is the difference between DAP vs. DDP and CIF?
When a seller offers a DAP freight term, you should compare the responsibility and shipping charge with DDP, CIF, or other incoterms. Below is some covering:
DAP vs. DDP
Under DDP shipping terms, the seller is in charge of the whole procedure for shipping the goods to the buyer. Moreover, the seller will take all costs and risks involved in transporting the cargo to the buyer’s premises. Such as any customs duties and taxes. It is the significant difference between DAP and DDP. As per DAP shipping regulation, the buyer pays for the duties and charges beyond the agreed location.
DAP vs. CIF
In a CIF shipping arrangement, the seller is responsible for delivering the goods to the port of destination and the costs of transportation and insurance. The buyer assumes the responsibility for import duties and more. The prime distinction between DAP vs. CIF is DAP access to all modes of transportation, whereas CIF is restricted to ocean freight and inland navigation.
FOB vs. DAP
FOB incoterm requires the seller to be answerable for delivering the goods to the port of shipment. And the buyer or seller may be in charge of paying the shipping costs, depending on the agreement. On the other hand, the seller always takes the shipping charge under the DAP shipping term.
Each of the shipping terms has its own advantages and disadvantages. And the appropriate shipping term depends on the specific requirements of the buyer and the seller. If you want to gain more detailed knowledge about DAP or other incoterms, it is time to contact Airsupply official team. It will step-by-step guide you on how the shipping terms work for you.
Where to get more shipping incoterms information?
Generally, professional freight forwarders will be experts in various incoterms for international trade. And the first freight forwarding company that cracks the top is Airsupply. Their dedicated team can provide you the comprehensive guides for shipping incoterms with the DAP terms.
Furthermore, Airsupply will customize the more appreciated shipping solution according to the freight terms you need. For fast delivery, it has tech staff to respond promptly to you and help you solve any problems. No matter whether sensitive cargo or dangerous goods, Airsupply shipping agents can handle it for you. Contact ASL to get a quote for the DAP and other shipping terms.