Modern international trade enforces the application of clearly defined rules by all participants in the process of commodity exchange. International Commercial Terms - or otherwise Incoterms introduce uniform rules to organize international trade in terms of cost sharing, responsibility and obligations of all parties to a trade agreement. They include e.g. shipping rule DAP. DAP - what does it mean and what is it?
DAP - what is it jest
shipping rule DAP Incoterms is one of the terms defining the rules of international trade Incoterms. DAP, or Delivered At Place, literally translates to “delivery to the place” and indicates exactly when the ownership, risk and cost of the product are transferred from the seller to the buyer. In the case of a rule DAP deliveries it is the seller who bears the risk in transporting the goods from the place of origin to the consignee. The buyer, on the other hand, bears the costs related to customs clearance and any import duties.
DAP Terms they are perfect for any transport process. It can be used both in classic transport and multimodal transport.
Segregation of duties in the shipping rule DAP
In the transport process of an international nature under DAP deliveries each party to the contract has clearly defined obligations. In this way, the process can be carried out smoothly and satisfactorily for both parties of the commercial transaction without detailed arrangements. Two parties to a commercial agreement deciding jointly to use DAP deliveries agree to perform the obligations that this term standardizes.
In the case of DAP Incoterms the seller is obliged to deliver the goods and all documents necessary for the transport process. The seller should also take care of the proper packaging of the goods, which will protect the load against damage and weather conditions. It is the seller's responsibility to finance all costs related to the transport from the place of origin to the addressee. For more complex transport processes, for example multimodal transport from China, DAP delivery means that the seller pays for the carriage of the cargo from the place of origin to the transhipment terminal in the country of origin of the goods, all sea, air or rail transport delivering the cargo to the transhipment terminal in the country of destination, to road transport in the country of destination to the place of destination (usually a bonded warehouse). At the same time, the seller finances all handling fees in the country of origin of the cargo (including non-standard ones), charges for loading and reloading the goods, and pays origin and destination fees. Moreover, it is the seller who assumes all risks associated with the transport of the goods until they are delivered to the destination agreed with the buyer.
In the case of DAP transport the buyer is obliged to pay for the goods and pay taxes, unloading costs, import duties, etc. The buyer also assumes VAT. It also has to take into account non-standard handling fees that may appear at the destination agreed by the parties. It is his duty to collect the delivered goods at the specified place and time.
DAP delivery - advantages and disadvantages of the solution
No doubt the rule DAP It has many advantages. One of them is a clear division of duties between the parties to the contract. It allows for greater liquidity in the management of money transfers and easier planning of supply chains. What's more, DAP transport gives the opportunity to purchase smaller tranches of goods, and thus reduces the need to involve large amounts of cash.
Czy DAP delivery terms have flaws? There are no 100% perfect situations. From the buyer's point of view, there may be a situation where the goods are detained during customs clearance, and this may incur additional costs. From the point of view of the seller, there is a risk that the customer will not collect the goods. Then, despite the transport costs incurred, the commercial contract is terminated.