Why does DAP matter?
DAP simplifies cost allocation in international sales—the seller handles all logistics and freight, while the buyer assumes responsibility upon arrival. This clarity prevents disputes about who pays for what. DAP is attractive to buyers because the seller bears most logistics costs and complexity. For sellers, DAP requires handling freight arrangements but transfers risk at a clear, defined point (destination arrival). DAP is more seller-friendly than FOB or CIF because the buyer assumes risk upon arrival, not when goods are loaded.
How does DAP (Delivered at Place) work in logistics?
A buyer purchases goods from a seller under DAP terms to a named destination (e.g., “DAP Berlin warehouse”). The seller arranges and pays for all transportation—truck, sea, customs clearance, final delivery—to get goods to Berlin. The seller arranges all customs procedures and duties under DAP. Once goods arrive at the destination place, risk transfers to the buyer. The buyer then arranges unloading, insurance, and takes possession. The buyer pays any additional costs beyond arrival.
DAP vs. other incoterms
- FOB (Free on Board) – Seller pays to loading port; buyer assumes risk once loaded
- CIF (Cost, Insurance and Freight) – Seller pays freight and insurance to port; buyer assumes risk once loaded (sea freight only)
- CPT (Carriage Paid To) – Seller pays freight to named destination; buyer assumes risk once handed to first carrier (all modes)
- CIP (Carriage and Insurance Paid To) – Seller pays freight and insurance to named destination; buyer assumes risk once handed to first carrier (all modes)
- DAP (Delivered at Place) – Seller pays all freight and duties to named destination; buyer assumes risk upon arrival at destination
- DDP (Delivered Duty Paid) – Seller pays all freight and duties to named destination and handles all customs; buyer assumes risk upon arrival with no remaining obligations
Example in practice
A machinery manufacturer in Milan, Italy sells industrial equipment worth €120,000 to a factory in Warsaw, Poland under DAP terms to Warsaw (buyer’s warehouse). The Milan seller arranges: (1) truck pickup from Milan factory to Warsaw warehouse via Austria and Czech Republic (€8,000), (2) Polish customs clearance and duty payment (€8,000), (3) all documentation and compliance. Total seller’s cost: €16,000. The truck departs Milan on Day 1, crosses the Austrian border, proceeds through Austria and Czech Republic, and enters Poland on Day 2, arriving at the Warsaw warehouse on Day 3. Once goods arrive at the Warsaw warehouse and are ready for unloading by the buyer, risk transfers to the buyer. If damage occurred during transport, the seller’s carrier is liable. If damage occurs after arrival at the Warsaw warehouse, the buyer bears the loss.