DAP: What It Is and How It Is Applied in Logistics

Incoterms are international rules governing delivery terms. They define the responsibilities of the parties for transportation, customs clearance, and insurance. One of the popular terms is Delivered at Place (DAP). We have already discussed FOB and FCA in detail, and today, our experts will explain what DAP includes and when it is most advantageous.

DAP Delivery Terms and Responsibilities

DAP is an agreement in which the seller commits to delivering goods to an agreed destination. Unlike other Incoterms, this can be another country: a warehouse, a pickup point, or any other location where the goods can be received.

For example, you purchase equipment from a German company, and the contract specifies delivery under DAP (Delivered at Place) terms to Kyiv. This means that the seller organizes transportation and handles export formalities, but their responsibility ends at the agreed delivery location. Once the goods arrive in Ukraine, unloading, customs clearance, and payment of duties become the responsibility of the Ukrainian buyer.

It is important to understand that under DAP, the seller is responsible for the goods until they reach the designated location. This distinguishes it from CPT (Carriage Paid To), where responsibility shifts to the buyer once the goods are handed over to the first carrier.

The terms are even clearer when considering the example of regular parcels from China. The seller finds the carrier, handles packaging and arranges export. The recipient’s task is to pick up the parcel at the delivery point and pay customs duties if they exceed the limit. A similar principle applies to commercial shipments.

Seller’s (Exporter’s) Responsibilities:

• Packaging and labeling goods according to international standards.
• Organizing and paying for delivery to the agreed destination.
• Handling export formalities in the country of dispatch, including customs clearance and export duties.
• Loading the goods.
• Covering all delivery costs to the destination, except for unloading.
• Providing all necessary documents (waybills, invoices, export declarations) to the buyer.
• Informing the recipient about the arrival of the goods.

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Buyer’s (Importer’s) Responsibilities:

• Unloading the goods at the destination (including hiring labor and special equipment if needed).
• Handling import customs clearance (paying duties, taxes, and fees).
• Obtaining permits, licenses, and certificates, if required.
• Inspecting the cargo upon delivery.
• Assuming all risks and responsibilities after the goods arrive.

DAP delivery is highly flexible. The goods arrive not only in the buyer’s country but at any agreed location. For example, a supplier can deliver goods to a port in Poland under DAP terms, to a warehouse, or to a specific address. Once delivered, the responsibility transfers to the recipient, who can then arrange further transportation, either by hiring a carrier or using their own transport.

When DAP Delivery Terms Are Beneficial

DAP terms are useful in the following situations:

• The buyer wants to minimize risks and logistical complexities. For example, a company may prefer not to deal with international shipping on its own.
• The seller offers the best shipping conditions. Some exporters collaborate with large logistics companies, securing lower rates and faster delivery times than if the buyer arranged transportation independently.
• Special transportation requirements. If the shipment involves fragile or perishable goods, the seller may provide more reliable delivery.
• High-value goods. For example, when supplying medical or industrial equipment, the seller may take full responsibility for transportation up to the final destination.

When DAP Is Not Advantageous

• If there are more cost-effective logistics contracts available.
• When the goods are urgently needed.
• When there is a tight budget, this model increases the final cost (as the seller includes a markup for organizing the delivery).
• If unloading is associated with high costs.

Now, let’s compare different Incoterms that our DiFFreight experts have previously discussed:

• FOB (Free on Board):

The seller is responsible for delivery to the port of departure and for loading the goods onto the vessel. After that, all risks and costs transfer to the buyer. This term is used exclusively for sea shipments.

• FCA (Free Carrier): 

The supplier hands over the goods to the carrier at a specified location (such as a terminal or warehouse). From that point, all risks transfer to the buyer. Loading is optional, depending on the handover location. This term applies to various transport types.

• DAP (Delivered at Place): 

The seller arranges transport, handles delivery, and covers insurance costs up to the agreed location. Upon arrival, responsibility shifts to the importer. The seller is not responsible for unloading.

DAP Incoterm 2020: Key Updates

The 2020 version of Incoterms kept DAP mostly unchanged but clarified certain aspects. The latest edition explicitly distinguishes responsibilities in customs clearance. It also confirms that the DAP term applies to all modes of transport. Additionally, it specifies that unloading is the buyer’s responsibility.

Potential Risks of DAP Incoterms

While Delivered at Place is a convenient option, it comes with certain risks:

• Higher transportation costs. The seller may include shipping rates above market value.
• Customs clearance delays. The buyer is responsible for import procedures, and if they lack experience, issues or delays may arise. It is advisable to hire customs brokerage services to ensure smooth border clearance.
• High unloading costs, especially for oversized cargo.
• Risk of damage after arrival.
• Need for precise coordination. All intermediaries must be aligned to prevent delays and extra charges.

Lower Risks, Better Delivery Terms

Incoterms DAP is generally beneficial for small businesses. For large shipments, especially from multiple suppliers, another model may be more suitable. Not sure which option is right for you? Schedule a consultation with the logistics professionals at DiFFreight. We offer competitive rates for all types of cargo transportation, consolidation services, and even warehouse storage solutions. Don’t take unnecessary risks—choose a reliable logistics partner!