DAP Incoterm | DAP Delivery Term | Delivered at place

Delivered at place (DAP) is one of 11 incoterms under Incoterms® 2020 by International chamber of commerce. 

Under DAP incoterm there is a place of delivery (named place) which gets decided mutually by seller and buyer. Seller's responsibility is to deliver the goods at named place; buyer's responsibility is to clear the goods (import custom clearance) by paying import duty and unloading at named place.
 
DAP is applicable for any mode of transportation, it's also applicable for more than one mode of transportation.

Cost:
Warehousing, packing, loading, primary transportation at origin, export clearance and duty, ocean freight and transportation at destination to be arranged by seller. Import clearance, import duty and unloading at destination to be arranged by buyer.
 
Risk:
Risk in DAP remains with seller until goods are delivered at named place without unloading.
 
Insurance:
Seller arranges insurance in case of DAP.
 
Example:
Let us understand DAP incoterm or delivery term with clearly with the help of one example.
 
Let us assume a cotton trader (exporter/seller) in Mumbai, India connects with a clothing manufacturer (buyer) in Shanghai, China who needs raw cottons. They discuss on further business opportunities.
Sampling: Seller takes out some cotton from few bales of different lots and send those to the buyer at Shanghai.
 
Negotiation:
If samples are passed on the parameters decided by buyer as per it’s requirement they starts discussion on the price.  
The exporter has contact with few good freight forwarders in Mumbai who can arrange local transportation in China along with operations at origin, so they decides to go ahead with DAP incoterm. Buyer wants goods to be delivered at their factory in Shanghai, china.
 
Contract:
As per the discussion between buyer & seller  contract gets signed by both parties and operable LC received. Contract is prepared based on multiple factors.
Delivery term: DAP Buyer's factory, Shanghai.
Payment term: LC at sight, 30 days
Accordingly buyer prepares Purchase order and shares the same to seller.
 
Operations:
Once deal is closed and contract gets signed  seller at Mumbai, India inform it’s warehouse to keep the bales ready to dispatch from approved lot. Meanwhile they contact their local transporter and freight forwarder to book trucks and containers respectively, freight forwarder checks availability of containers and places booking.  Seller also contacts their clearing agent and tells them tentative arrival date of the products at CFS.
Once cotton bales are ready, seller asks transporter to place trucks so that they can move the cotton bales to CFS, transporter places trucks at seller's premises at Mumbai for loading, goods are taken to CFS after completion of loading, and information is passed to freight forwarder and clearing agent (CHA) regarding arrival of cargo at CFS. CHA requests for stuffing permission from customs upon arrival of the goods at CFS and freight forwarder lifts empty containers from container yard and places those containers at loading area. Once stuffing permission is received, CFS supervisor arranges fork lift & manpower for stuffing. After completion of stuffing CHA requests plant and quarantine officer/ plant protection officer for inspection of the cargo, make a note here for export or import of any plant product "No objection certificate" must be issued by plant quarantine department. Officer from plant quarantine department visits CFS, inspect the cargo physically and collect samples. After testing of samples if they find satisfactory test result they issue "No objection certificate", CHA collects the  NOC and keeps that in the file along with other original documents and the same file is presented at the customs. The CHA now requests custom officer to inspect the cargo, custom officer examines the cargo, if everything found satisfactory custom officer clears the cargo and issues “Let export order”.
The CHA/ exporter already informs fumigation agency and issues work order, fumigation is done by the agency with the doses as per prescribed rules of destination country.
After completion of clearance containers are sent to Nhava Sheva port, containers shall be handed over to the terminal once those are gated in and the same containers shall be loaded to the vessel upon arrival.
Once vessel is on boarded; seller(exporter) coordinates with freight forwarder and clearing agent(CHA) for documents.
Freight forwarder approaches liner's office for Bill of lading.
CHA approaches various offices for remaining documents, they make sure all documents are prepared as per LC.

Documents issued:
1. Commercial invoice
2. Packing list
3. Bill of lading
4. Certificate of origin
5. Phytosanitary certificate
6. Fumigation certificate
5. Insurance certificate
6. Other documents if any

Once document all are received seller submits those documents to the negotiating bank as per LC's terms and conditions. Negotiating bank verify documents and sends to issuing bank, issuing bank informs buyer/importer in Shanghai  and importer collects the documents after completion of formalities.
Once documents are received importer sends the documents to their CHA for clearance formalities.
After arrival of the cargo at destination buyer's CHA at Shanghai starts the clearance process, they clear the cargo from customs with the help of post shipment documents and inform buyer/importer.
In case of cotton shipments buyer and seller mutually decides and appoint a controller (inspection agency) for monitoring the weight, similarly they mutually agree for a laboratory where samples shall be tested in order to check for the quality.
Controller checks the cargo and performs weighing of each  cotton bale and they note the weights of all the bales. Based on the weights controller prepares a landing report which is acceptable to both the parties(seller & buyer). If there is weight shortage buyer will raise a debit note to seller for the short quantity, in case there is a weight gain seller will raise a debit note to buyer for the shortage quantity and claim the weight gain.
Now seller contacts their freight forwarder for further movement of the cargo. Forwarder's counterpart at China arranges the transportation to buyer's factory at Shanghai. Transporter hands over the cargo to buyer, takes proof of delivery and send the proof of delivery to seller. Seller's responsibility ceases once goods are delivered at buyer's factory.

This is the process of a shipment under DAP incoterm.

Also check other incoterms:

EXW (Ex Works)

FCA (Free Carrier)

FAS (Free alongside ship)

FOB (Free on Board)

CFR (Cost and Freight)

CIF (Cost Insurance & Freight)

CPT (Carriage paid to)

CIP (Carriage & Insurance paid to)

DDP (Delivered Duty Paid)

DPU (Delivered at place unloaded) – This is new incoterm introduced in 2020