You may have heard of the term “Delivered at Place” before if you’re in the ecommerce, or business world. However, a lot of people still don’t have a full understanding of what DAP means. If you’re one of these business leaders, don’t panic.
Today, we’re going to introduce you to the meaning of DAP, and why it’s so important to consider when you’re building certain kinds of international companies.
Delivered at Place, just like many other business acronyms, can seem complicated at first. However, the reality is that it’s just a term to refer to a certain situation we use in sales.
DAP Meaning: Defining DAP
What is DAP, then?
Delivered in place, or DAP is a term used in international trade to describe a situation where the seller of a certain set of goods or products bears the cost and responsibility of transporting those items to a specific place. The seller is also responsible for paying for any losses that might occur during the transit or movement of the goods.
The ICC, or International Chamber of Commerce, is a large, representative institution of 45 million companies which promote and facilitate extensive international trade. This group is also responsible for publishing the terms and conditions of certain situations which may occur in the trade landscape.
Delivered at Place basically means that the seller takes on the various risks and costs of delivering goods to a specific location. This also means that the seller is responsible for everything, including documentation, packaging, loading charges, export approval, and delivery. This trade term was introduced more than 20 years ago now, but it’s still in practice today.
How Delivered at Place Works
Delivered at Place is a process where the seller of a good or item takes on the risks and costs associated with sending those goods to an agreed destination. The seller is responsible for everything in this process, including loading charges, delivery, and export approval. In turn, the buyer takes over the responsibility and risk of unloading any goods that are delivered and making sure they’re cleared according to import standards.
Delivered at Place agreements are applicable to virtually all kinds of transportation when a product or service is delivered from one place to another. Usually, there’s a listing which dictates where the buyer takes over the responsibilities of dealing with the product.
When Delivered at Place was first introduced as a shipping and delivery term, it took over from the phrase “Delivery Duty Unpaid,” or DDU. However, there are times when this term might continue to be used on a colloquial basis.
As an example of how DAP works, let’s imagine a buyer in London, in the UK, agrees to join a deal with a seller in Chicago, in the US. The DAP agreement might include the London buyer’s decision to purchase a certain consignment of goods. With DAP, there’s an understanding that the seller from Chicago will be transporting the goods from the storage location to the port where they’ll be delivered to London.
If the products are damaged when being transported, the seller bears the costs. The buyer deals with things like customs clearance, import tariffs and local taxes, while the buyer deals with exporting. If the terminal destination isn’t the port in London, but a final destination (a warehouse), the seller needs to pay to get the product there.
DAP and the Costs of International Trade
DAP is just one term among many acronyms which can appear within the international trade environment, from CFR, to CPT, CIF, DDP (delivered duty paid), and many others. International trade can come with various costs, import duties and shipping terms to consider.
There are clear guidelines currently set out for DAP arrangements. However, it’s still possible for disputes to emerge. Sometimes, the goods carrier may incur something called a demurrage fee, which means that the goods weren’t unloaded online, which leads to a delay in the clearance of the products from either side of the agreement.
When issues do occur, the fault is often attributed to the party that failed to maintain a timely delivery schedule. However, it can be difficult to determine who is actually responsible, because of the amount of documentation and complexity required when moving goods from place to place.
Beyond DAP fees, other international trade expenses might include:
- Export license fees: The cost associated for the application to controllers of exports, imports, and customs duty licenses.
- Production and procurement costs: The costs of obtaining and processing raw materials, as well as labor and machinery costs.
- Packaging: packing costs for the exporter include any of the costs associated with reducing potential damage to the product during transit. Packaging must be offered according to the rules of the importing country.
- Insurance: Costs for insurance to ensure that the goods are protected if any damage does happen during transit. Though insurance isn’t mandatory it can be a helpful addition for this shipping process.
- Freight charges: the Freight costs to get the product to the named place of destination, including seaports, airports, and so on.
- Custom clearance: Payments for any custom costs required to bring the product into the right destination. The importer or buyer is responsible for this cost, as well as unloading costs at the final destination.
Using DAP Strategies for Shipping
Like many terms in shipping, from FOB to FCA, DAF and DAB, DAP incoterms can be difficult to understand at first. The important thing to remember is that the buyer and seller are each responsible for a certain set of fees in this process. Under DAP, the seller is responsible for the majority of the transportation process, leaving minimal liabilities for the buyer. This makes it among the top solutions recommended to help encourage larger purchases.
Cargo insurance isn’t necessary with DAP, but the sheer level of responsibilities to keep track of means that many professionals will invest in this cost anyway, to reduce the overall risk level until the item arrives at a specific location.
DAP for shipping shouldn’t be confused with “Developmentally appropriate practice”, which is a term used in therapy for early childhood issues within young children. Rather, this word of the day is a term belonging specifically to the fulfilment environment for ecommerce companies, and the import clearance, unloading costs, and various other fees that the importer and exporter may need to pay.