The DAP Incoterm is relatively new. It first appeared in the Incoterms 2010 and although it has not since been changed, , it has been adapted to the new structuring scheme of Incoterms 2020. DAP in shipping means the seller bears the costs and risk of the transport including packaging (if necessary) and labelling to the agreed destination (e.g. "DAP Chicago, 1743 S Linneman Rd"). The delivery must be made on time or on schedule. The seller engages an external logistics company as the carrier or uses their own means of transport for the carriage of the goods (the latter option is only valid since Incoterms 2020 under Incoterms rule A4 for transport).
When using the DAP Incoterm, the seller shall make the transport goods available and "ready for unloading" at the place of destination. The seller shall also take care of the DAP export including all associated costs and customs formalities. This also applies to any transit countries. The buyer, in turn, is responsible for the import and any corresponding expenses. Upon request, the buyer must assist the seller with export and transit clearance by providing documents and information, at the seller's expense.
DAP delivery terms and unloading
An important point with the trade term DAP is that the seller is not responsible for unloading, unless otherwise contractually agreed. They only have to make the cargo available at the destination, ready for unloading. If the seller unloads the goods, they do so at their own expense – they are not entitled to claim this from the buyer afterwards. If the seller is also handling and paying for unloading, it is best to choose the DPU Incoterm (Delivered At Place Unloaded). Otherwise, with DAP, the buyer takes care of the unloading and also bears the costs.
In the context of the DAP Incoterm, making the goods available and "ready for unloading" means that the buyer has unhindered access to the goods. If the goods are in a container, this must be freely accessible without, for example, other containers blocking access. Any transport securing devices must be removed by the seller.
In order for the buyer to be able to take delivery of the goods, they must receive the necessary delivery and transport documents from the seller (at the seller's expense) These can be a bill of lading, sea waybill or inland waterway transport, a consignment note in the case of transport by ship or a consignment note in the case of transport by rail, road or air.
Specify the destination or point precisely
The current Incoterms consistently refer to the importance of being as specific as possible about the place of destination, whether it is a town, port or geographical point. This place should be clearly stated in the transport contract. If this is missing and there is no common practice regarding the exact place of delivery at the place of destination, the seller can choose it at their own discretion.
No compulsory insurance
The Incoterm DAP 2020 does not require any party to take out transport insurance. Since the seller bears the risk until the goods are ready at the destination, it is of course in their own interest to take out insurance at their own expense. The mandatory liability of an externally commissioned carrier does not usually cover all risks. The buyer is obliged to provide all necessary information for the conclusion of an insurance policy.
The seller shall organise and pay the costs of transport to the agreed place of delivery or destination. The delivery must be made on time. If necessary, the seller must also take care of export and transit, including formalities and costs. If requested, the buyer must support the seller with the necessary information and documents (costs for which must be reimbursed by the seller). The seller also pays for delivery and transport documents received by the buyer.
The buyer, in turn, pays for the import including customs, import licences, security clearances and other formalities. If they need information or documents from the seller for this purpose, the seller must comply with the corresponding request - but at the buyer's expense.
Unless otherwise agreed in the contract of carriage, the seller is only required to make the goods available on the means of transport used, ready for unloading. The buyer organises and pays for the unloading. If the seller is also to take care of the unloading, the Incoterm DPU (Delivery at Place Unloaded) should be chosen.
When using DAP in shipping, neither the buyer nor the seller must take out transport insurance. Since the risk of transport to the place of destination lies with the seller, the seller (in contrast to the buyer) usually has an interest in covering the transport with insurance. If they need information from the buyer to obtain insurance cover, this must be provided. The costs shall be borne by the seller.