Incoterms, short for International Commercial Terms, are globally recognized rules created by the International Chamber of Commerce (ICC). They help standardize contracts in international trade.
These terms define the responsibilities of buyers and sellers. They cover delivery, risks, and costs. You can think of them as a guide to what you and the other party need to do during import and export activities.
Incoterms 2020 is the latest version. It’s important to use the updated terms to avoid misunderstandings.
What is DAT Incoterm
DAT Incoterm, also known as Delivered at Terminal, outlines the seller’s responsibilities until the goods reach a terminal at the destination.
The seller is accountable for export clearance but not import clearance. When using DAT Incoterms, the seller arranges and pays for transporting goods to the terminal. This terminal could be a dock, warehouse, or any agreed place.
Once the goods arrive at the terminal, risk transfers from the seller to the buyer. From this point, the buyer assumes all risks for the cargo, including potential damage and loss. It’s important to be aware of this cutoff to ensure clear responsibilities between the parties.
What are the Obligations of the Seller Under DAT
Handling Export Formalities
Handling export formalities is a key responsibility.
Assuming that you are a seller, you need to be familiar with the goods and mode of transport.
You must obtain export licenses and necessary permits. This requires you to be familiar with regulations in both your country and the buyer’s country.
You’ll also handle customs clearance. This involves preparing and submitting documents like commercial invoices, export declarations, and other required forms.
Packaging and Loading
You need to make sure the goods are properly packaged. This means using materials that protect the goods from damage during transit. Sturdy boxes, cushioning materials, and secure bindings are a must.
You also have to load these goods onto the transport vehicle. The job doesn’t stop at just placing the items; they should be securely fastened to avoid movement.
Moreover, the packing list and other relevant papers should also be prepared to accompany the shipment.
Transport and Delivery
The obligations extend to arranging and paying for transport to the named terminal. So, coordinating with a reliable carrier to ensure the goods are delivered at the terminal safely and on time is necessary.
Once the goods reach the terminal, they should be unloaded from the carrier’s vehicle. This means you should oversee the unloading process and deal with any potential issues that arise.
What are the Obligations of the Buyer Under DAT
Payment and Acceptance
As the buyer, you need to pay for the goods as per the contract. This means covering the cost specified in the agreement with the seller. You must also accept the goods once they are unloaded at the agreed destination port.
To facilitate this, ensure the terms of payment are clear and that you have the necessary funds or credit arrangements. Prompt payment helps in maintaining a good relationship with the seller and ensures smooth transactions in future deals.
Import Formalities
Once the goods have arrived at the terminal, you are responsible for import customs formalities. This includes handling import duties and taxes such as VAT. Make sure to complete all required paperwork to bring goods into the country legally.
You may need to coordinate with customs brokers or agents to expedite this process. Proper handling of import formalities ensures that your goods clear customs without delays, avoiding any potential storage fees or legal issues.
Arranging Onward Transport
After customs clearance, you must arrange for the onward transportation of the goods from the terminal to their final destination. This could involve coordinating with local transport companies to ensure timely and safe delivery.
What are the Advantages and Disadvantages of Using DAT?
Advantages of DAT
For Buyers
- Reduced Hassle: Buyers benefit from having the seller manage the main carriage and unloading at the terminal, reducing the buyer’s logistical responsibilities.
- Risk Management: The risk of damage to goods during transportation is borne by the seller until the goods are unloaded at the terminal, protecting the buyer from potential losses during this phase.
- Predictability: Buyers receive goods at a predetermined terminal, allowing for better planning and scheduling of subsequent logistics.
For Sellers
- Control Over Transport: Sellers have the opportunity to choose efficient and cost-effective transportation methods up to the terminal.
- Clear Endpoint: The seller’s responsibility ends once goods are unloaded at the terminal, providing a clear endpoint for their obligations.
Disadvantages of DAT
For Buyers
- Cost Implications: Although the seller handles the main carriage, these costs are often included in the price of goods, potentially leading to higher overall costs for the buys.
- Final Leg Responsibility: Buyers are responsible for onward transportation and import formalities from the terminal, which can involve significant costs and logistics.
For Sellers
- Comprehensive Responsibility: Sellers must manage the entire transportation process up to the terminal, including export customs formalities and unloading, which can be complex and costly.
- Potential Delays: Sellers remain responsible for the goods until they are unloaded at the terminal, meaning any delays or issues up to that point are their responsibility.
What is the Difference Between DAT, DDP, CIF, DAP, FCA, and EXW?
| Aspect | DAT (Delivered At Terminal) | DDP (Delivered Duty Paid) | CIF (Cost, Insurance, and Freight) | DAP (Delivered At Place) | FCA (Free Carrier) | EXW (Ex Works) |
| Delivery Point | Goods are delivered to a terminal, and the seller is responsible for unloading. | Goods are delivered to the buyer’s location, with the seller handling all costs and risks, including duties and taxes. | Goods are delivered to the port of destination, with the seller covering cost, insurance, and freight. | Goods are delivered to a specified place and ready for unloading by the buyer. | Goods are delivered to a carrier or another specified place, with the buyer responsible for loading. | Goods are made available at the seller’s premises, with the buyer responsible for all transport. |
| Seller’s Responsibilities | Responsible for transporting and unloading to the terminal. | Responsible for all costs, including transport, duties, and taxes, until delivery at the buyer’s location. | Responsible for cost, insurance, and freight to the destination port. | Responsible for transport to the specified place but not unloading. | Responsible for delivery to the carrier or specified place. | Minimal responsibility; only makes goods available at their premises. |
| Buyer’s Responsibilities | Responsible for import duties, taxes, and further transport from the terminal. | Assumes responsibility after delivery at their location, with no additional costs. | Responsible for unloading, import duties, and further transport from the port. | Responsible for unloading, import duties, and taxes from the specified place. | Responsible for loading, transport, and all subsequent costs and risks. | Responsible for all costs and risks from the seller’s premises onward. |
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Frequently Asked Questions
Has DAT been replaced by another Incoterm in recent updates?
Yes, in the Incoterms 2020 update, DAT has been replaced by DPU, which stands for “Delivered at Place Unloaded.” The responsibilities remain similar, focusing on the seller delivering and unloading goods at the destination.
Is the DAT Incoterm still in use after the 2010 amendment?
Although the term “DAT” was replaced by “DPU” in Incoterms 2020, some companies may still refer to DAT, especially if they are operating under older agreements. It’s essential to clarify which rules apply before finalizing any contracts.