DAP, short for “Delivered at Place”, means that the exporter is obligated to load the goods onto the collecting vehicle and deliver to the importer at the agreed point of delivery or destination not unloaded.
DAP is used in any mode of transportation. Export clearance is the liability of the exporter, while import clearance and all related customs formalities are carried out by the importer.
How is DAP different from CPT?
As I mentioned earlier in my blog post Incoterms 2020 CPT, all the risks transfer to the importer when the exporter loads the goods on the first carrier although the transportation is paid by the exporter. DAP, on the other hand, requires the exporter to bear all the risks until the point of delivery/destination. So, the risks and cost of transportation to the delivery/destination point fall on the exporter.
Another important difference is that, under Incoterms 2020 DAP rules, delivery and destination place or point are the same. That’s why the parties have to specify the place of delivery/destination precisely, because at that point it’s the importer that bears all the risks and costs starting from unloading the goods from the means of transportation arranged and paid by the exporter.
An example to explain the process
To recap with an example; Aden Buyer from Lebanon and Miguel Seller from Portugal make a sales agreement according to which the Incoterm is “DAP Beirut ‘Aden’s Warehouse address’”. When the delivery date is due, Miguel delivers the goods to the carrier that he had made a contract with. The carrier takes the goods to the port and loads them on board the vessel after Miguel’s customs broker clears the goods.
When the vessel arrives at the port of Beirut, Miguel’s forwarder carries out THC operation and notifies Aden of the arrival. Then, Aden clears the goods through its own customs broker and Miguel’s carrier delivers the goods at Aden’s warehouse unloaded which is the agreed point of delivery/destination.
In this transaction Miguel, having cleared the goods at his country’s customs, bears all risks and costs of the shipping from his factory until the specified delivery/destination point.