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DAP Incoterm is a term used to describe a buy-sell arrangement where goods are delivered to a specific location, also known as the “named place”. DAP is an acronym for “Delivered at Place.” Delivery methods vary depending on the type of goods being delivered and the geographic location of the named place. In other words, DAP is not a maritime-only term and can be used with all modes of transport. The DAP term was introduced into the Incoterms in 2010.
Transference of risk
In DAP terms, risk passes from the seller to the buyer at the named place of destination. Most of the time, this named place would be somewhere near the buyer’s warehouse or even the buyer’s warehouse itself. Nonetheless, under DAP the buyer still has to arrange for import clearance, which means in most cases that the buyer would be the importer of record.
Under the DAP terms, the seller is not responsible for unloading the cargo at the place of destination. This is a major issue that many buyers and sellers overlook when dealing on DAP terms. Although in many cases this might not be a problem, it would become a hassle if the cargo is not easily unloaded or it is delivered to an inconvenient place.
For example, if a buyer orders large and heavy equipment like a tunneling drill from a seller that needs to be delivered to a work site, there is a possibility that the work site will not be equipped to unload the tunneling drill from the conveyance that brings it to the work-site. In this case, the buyer would have failed to take delivery and be liable for any charges incurred. For example, if the buyer now takes 2 weeks to arrange for a crane and manpower to access the work site just to unload the item from the low-bed truck that brought the item there, the buyer would have to pay for all charges incurred. If the daily rate of holding the low-bed was not agreed upon in advance, the buyer would be at the mercy of the low-bed operator who could effectively choose to hold the item until whatever rate they deem to be fair is paid upfront!
Such risks are not limited only to the DAP Incoterm. Using any Incoterm without fully understanding the roles and responsibilities between buyer and seller can result in unexpected charges and delays. In worst-case situations, cargo could also get abandoned to Customs authorities. Hence, it is important for both buyers and sellers to study the Incoterms that they choose to deal with before executing any shipment.
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