Released On 10th Sep 2019
DAP vs DDP vs DAT Incoterms – What’s The Difference?
We wrote briefly about the shipping Incoterms “DAP”, “DDP” and “DAT” in our popular Glossary of Terms page, but we’ve received so many questions about these different delivery methods that we thought they deserved a dedicated explanation about how they differ from each other.
It's useful to know the difference, because each incoterm determines the point at which you become responsible for certain risks and costs. This could influence the incoterms you negotiate with your supplier, or the expertise you require to navigate the different processes involved in importing your goods.
If you need more help after reading this article, please get in touch to find out about our services.
What does DAP stand for in shipping logistics?
In shipping terms, the acronym DAP stands for Delivered at Place.
What is Delivered at Place (DAP)?
This is an international trade term (an Incoterm) that describes a type of arrangement between buyer and seller, in which the seller agrees to pay all the costs of moving sold goods to a specific location. This includes:
- Export approval and legal formalities from the exporting country
- Loading charges
- Ultimate transport and delivery to a named destination
If any part of these arrangements incurs financial losses for the seller, in a DAP agreement, the seller takes responsibility for these, too.
Any form (or combination of forms) of transportation may apply in a DAP agreement (and also for agreements under DDP and DAT shipping terms).
The contract usually specifies the point at which the buyer takes on financial responsibility, e.g. “Delivered at Place, Port of XXX”.
What are the responsibilities of the buyer with DAP?
When the goods have reached the specified destination, the buyer takes on the risk and responsibility for the unloading of the goods and clearing them for import. The buyer in a DAP shipping agreement also has responsibility for paying import duties and any other clearance or local taxes.
How is DAP different to DDP shipping?
DDP is another international trade term (an Incoterm) which stands for Delivered Duty Paid. It’s quite similar in many ways to DAP except that DDP shipping terms represent the maximum responsibility in costs and risk assumption from beginning to end for the seller.
As with DAP, the seller in a DDP agreement assumes all the risks and costs of the operation to deliver the goods to a specified place in the country of importation. However, in a Delivered Duty Paid arrangement, it is the seller, not the buyer, who also bears the costs and taxes of import clearance.
With DDP, the buyer is only responsible for unloading the goods at the final destination.
When should DDP shipping terms be used instead of DAP shipping terms?
- If there are no customs between the country of origin and the country of destination, for example the European Union, there’s no necessity to clear goods for import, and so DAP shipping terms must be used instead of DDP.
- When the seller hasn’t the ability to carry out import clearance, or the necessary representatives to do it for them, they must not use DDP Incoterms, they should use DAP shipping terms instead.
What is DAT and how is it different to DAP and DDP?
DAT is the third (and comparatively new) Incoterm that is used to indicate different methods of shipping goods. DAT stands for Delivered at Terminal, and while the risks and costs assumed by the seller are very similar to both DAP and DDP, there are small differences.
- With Delivered at Terminal, the responsibility for the imported goods is with the seller until after the goods are unloaded at the terminal (which can be a quay, warehouse, container yard or road, rail or air cargo terminal).
- With DAT, it’s the buyer, not the seller, who is responsible for the final leg of the journey and the final unloading of goods.
With a DAT arrangement, the buyer still covers the cost of paying import duty, taxes and any other customs costs.
Know your delivery incoterms to understand your true shipping costs and responsibilities
When you understand the differences between DAP, DDP and DAT incoterms, you can more accurately project your shipping costs. This may impact your product pricing, too. Understanding the different risks and responsibilties associated with each incoterm will also help you prepare for a hassle-free import process.
If you need help to expedite the smooth import of your own goods, please contact Mouse & Bear.