08 flies in the ointment when a buyer contracts DAP delivery terms

DAP, disadvantages to Importer (Buyer)

This web post is from the series of posts about the delivery terms under Incoterms 2020 and its impact to exporters and importers when applying each term into business.

The below details explains about the challenges faced by an importer when he handles DAP delivery terms.  Let us discuss such disadvantages one by one below under DAP terms.

01.One of the demerits for importer under DAP terms is that comparatively with most of the other  rules of delivery, under DAP terms, the importer meets more expenses and need to pay more cost on buying goods, as he carries very less risks only under movement of goods.

02. Under DAP terms of delivery, the buyer misses the chances to learn local transportation at exporting country, export documentation process, export customs clearance process, main carriage freight handling and on carriage process in buyer’s country.  As we know, for any export import business, familiar with pre carriage, main carriage and on carriage with export customs clearance process in both buyer’s and seller’s country.   This is a drawback for importer when contract of carriage is on DAP basis.

03. Another disadvantage under DAP terms for importer is that the buyer misses the opportunity to be familiar with the movement of goods at exporter’s country and government rules and regulations.  So the buyer may lose the chances of widening his business up to that extend for his inability to meet similar business transactions.

04. Under DAP, the importer under Export import business cannot monitor the safety of goods till arrival of goods at named destination as the buyer does not undertakes pre carriage, main carriage and on carriage. This is a weakness for buyer when delivery rules are on DAP basis.

05. Another pitfall for importer under DAP terms is that the importer is responsible for any damage or loss of goods when unloading goods at named destination in international business if delivery terms are DAP. The importer has to ensure that the goods are in good condition before unloading, as delivery in good condition is under the risk of seller under DAP delivery rules.

06. The buyer does not have control over ensuring safety of goods as pre carriage, main carriage and on carriage are undertaken by the seller under DAP delivery terms. The buyer will come to know about damage and loss of goods at the time of unloading goods.  There are chances of dispute if such incidents happen. This is a stumbling block for importer when delivery terms are under DAP.

 07. One of the other flies in the ointment for importer under DAP delivery rules is that the buyer cannot assess the cost at each point of movement of goods; say pre carriage cost, main carriage costs, export customs clearance cost, on carriage cost etc., as seller takes care all such movements under DAP terms of delivery.

08. Under DAP terms of deliver, for the purpose of saving money, if the seller appoints a poor service provider for movement of goods the buyer may have to face inconvenience in collecting shipping data and tracking details.  The delay in delivery of goods also may seriously affect the buyer in planning production resulting financial losses. This is another stumbling block for buyer when contract of movement of goods are on DAP basis.

The information about the drawbacks for buyers when they handles terms of delivery on DAP basis are explained above.

If you would like to add more information about this topic on disadvantages in handling DAP terms to importers, share below under discussion forum column:

Discussion Forum

You can also share your thoughts about this article.
Any one can answer on question posted by Readers