Transportation services closely related to trade are used by businesses around the world. In order for all orders and services in this regard to take place in a transparent and orderly manner, they must be subject to various laws and rules. Among them are the International Trade Rules (Incoterms), which are updated every 10 years. Among them, the terms of the DAP are specified. What do these provisions refer to and what issues do they allow to regulate in connection with cargo transportation?
What is a DAP?
International Trade Rules is a document that sets out the rules for the exchange of goods, as well as the costs and obligations of sellers and buyers. These rules are organized into several categories, and one of them is DAP, from Delivered at place, which is literally translated as “delivered at place.” The provisions included in the DAP define the scope of responsibility as to the delivered goods at the various stages of transportation and during the time after delivery.
Under the terms of the DAP, the duty to unload the goods lies with the person who purchased the goods. Thus, it is also the responsibility of that party to arrange any equipment or persons necessary to unload the shipment and release the appropriate vehicle or means of transportation. From the moment the cargo is delivered to the place of receipt, the consignee is also responsible for the goods.
At the same time, the seller bears the risk and is responsible for the cost of delivering the transported goods to the destination. DAP conditions apply to both air, sea, rail and road freight.
DAP conditions vs. customs duty – who bears the costs due?
In the case of purchase and transportation of goods requiring payment of customs duties or VAT in accordance with the DAP terms and conditions, the relevant amounts must be paid by the buyer. In addition, in a situation where there is a customs inspection, the costs of the inspection also remain on the side of the person purchasing the goods and having the cargo transported.
However, it is on the seller’s side to organize and see to all formalities related to the preparation of the necessary documents for transport, including export clearance. On the buyer’s side, on the other hand, is the obligation to pay the import clearance fees.
DAP delivery terms – advantages and disadvantages
DAP delivery terms are, first and foremost, clear rules for the division of responsibilities between the parties executing a given contract. Clear definition of tasks and responsibilities allows for increased liquidity in financial flows and more efficient planning of deliveries.
At the same time, the buyer has to reckon with possible delays resulting, for example, from the detention of cargo at customs clearance and thus increasing the cost of the entire transportation execution. The seller, while realizing the transport, also bears some risk of not picking up the ordered products, which can generate losses with round-trip idle driving and the additional cost incurred for the necessary formalities.
