All You Need to Know About DAT (Delivered at Terminal) Incoterms in International Shipping

International trade can be complex, involving numerous terms and conditions that define the responsibilities of sellers and buyers. Among these terms, DAT (Delivered at Terminal), as defined by the International Chamber of Commerce (ICC), is a critical Incoterm used in global shipping. Although it was renamed DAP Unloaded (Delivered at Place Unloaded) in the 2020 edition of Incoterms, its fundamental principles remain the same.

This article provides a detailed breakdown of DAT Incoterms, highlighting the responsibilities, costs, and risks for both parties in a transaction.

What is DAT in Incoterms?

DAT, short for Delivered at Terminal, refers to a shipping arrangement where the seller delivers goods to a specified terminal or location at the destination port. The seller is responsible for transporting and unloading the goods at the agreed terminal. Once unloaded, the responsibility, risks, and costs shift to the buyer. The terminal could be a port, transportation hub, warehouse, or even a forwarding agent’s facility.

Key Features of DAT Incoterms:

• The seller oversees the delivery and unloading of goods at the designated terminal.
• The buyer takes over responsibility after the goods are unloaded.
• Both parties must agree on the place of delivery before shipment begins.

By clearly defining these responsibilities, DAT helps streamline the international shipping process, reducing misunderstandings and disputes.

Seller’s Responsibilities Under DAT Incoterms

The seller has significant obligations under DAT terms. These include managing costs, ensuring timely delivery, and bearing risks until the goods are unloaded at the designated terminal.

1. Cost Responsibilities

The seller must bear all costs associated with delivering goods to the terminal. These include:

• Warehouse Charges: Expenses for storing goods before shipment.
• Packaging Costs: Fees for labeling and preparing goods per export standards.
• Inland Transportation Charges: Costs of moving goods from the warehouse to the port of origin.
• Export Customs Duties: Payment for customs clearance at the exporting country.
• Freight Forwarding Fees: Compensation for the logistics agent handling the shipment.
• Main Freight Costs: Charges for transporting goods from the origin port to the destination port.
• Documentation Fees: Costs for preparing shipping documents, including bills of lading, export licenses, and invoices.

2. Delivery Responsibilities

The seller is obligated to deliver the goods to the agreed-upon terminal. This delivery includes:

• Managing logistics for the main freight journey.
• Ensuring goods reach the specified terminal, whether it’s a port, warehouse, or transport hub.
• Unloading goods at the terminal.

3. Risk Transfer

Under DAT, the seller holds the risk until the goods are safely unloaded at the designated terminal. If the goods are damaged during transit or unloading, the seller is liable.

4. Insurance

The seller is required to insure the goods during transit, covering any potential losses or damages until the goods are unloaded. For sea freight, marine insurance is a must.

5. Duty and Customs Clearance

The seller is responsible for:

• Handling export customs documentation and fees.
• Ensuring all export procedures are completed.

Buyer’s Responsibilities Under DAT Incoterms

Once the seller delivers and unloads the goods, the buyer assumes responsibility. This includes managing import formalities, paying post-delivery costs, and bearing associated risks.

1. Cost Responsibilities

The buyer must pay for:

• Import Customs Duties: Charges for clearing goods at the destination country’s customs.
• Port Handling Fees: Costs incurred for storing or processing goods at the terminal.
• Inland Transportation: Expenses for moving goods from the terminal to the buyer’s location.
• Storage Costs: Charges for warehousing goods after delivery.

2. Delivery Responsibilities

The buyer is responsible for:

• Accepting goods at the terminal.
• Collecting relevant documents from the seller to facilitate import proceedings.
• Transporting goods to their final destination.

3. Risk Transfer

The risk transfers to the buyer once the seller has unloaded the goods. If the buyer fails to provide clear instructions about the delivery terminal, they may bear additional risks or costs.

4. Insurance

The buyer is not obligated to insure the goods post-unloading. However, they may choose to do so for added protection during inland transit.

5. Duty and Customs Clearance

The buyer handles:

• Import duties and taxes.
• Import clearance procedures.
• Coordinating with customs authorities using documents provided by the seller.

Key Differences Between DAT, DAP, and DDP Incoterms

Incoterms define responsibilities in international trade, and understanding the distinctions between DAT, DAP, and DDP is essential for choosing the right term for your shipment.

Delivery Location:

• In DAT (Delivered at Terminal), the delivery happens at a specific terminal, such as a port, warehouse, or transport hub. The seller is responsible for unloading the goods at this terminal.
• DAP (Delivered at Place) allows delivery at any agreed location, including the buyer’s premises, but unloading is not the seller’s responsibility.
• With DDP (Delivered Duty Paid), the seller delivers goods directly to the buyer’s location, taking responsibility for unloading.

Unloading:

• DAT: The seller handles unloading at the terminal.
• DAP: Unloading is the buyer’s responsibility at the agreed location.
• DDP: The seller takes charge of unloading the goods at the buyer’s location.

Customs Duties:

• Under DAT and DAP, the seller pays export duties while the buyer handles import duties.
• In DDP, the seller bears both export and import duties.

Risk Transfer:

• For DAT, risk transfers once goods are unloaded at the terminal.
• In DAP and DDP, the risk transfers when goods are delivered to the buyer’s location.

These distinctions influence costs and risk-sharing, making it crucial to select the term that aligns with the shipping needs.

Advantages of DAT Incoterms

Delivered At Terminal (DAT), now referred to as Delivered At Place Unloaded (DPU) in the latest Incoterms edition, offers several advantages for both buyers and sellers, particularly in international trade. Here’s a detailed look at the benefits:

Simplified Seller Responsibilities:

DAT defines clear obligations for the seller, who must handle all transportation, export customs clearance, and unloading at the named terminal. This simplifies the buyer’s role in the initial stages of the shipping process, as they do not need to coordinate with freight forwarders or handle unloading logistics.

Risk Management for the Buyer:

Since the seller is responsible for the goods until they are unloaded at the terminal, the buyer is protected from risks such as damage or loss during transit. This ensures that the buyer assumes responsibility only after the goods are safely delivered and unloaded.

Cost Clarity:

Buyers benefit from transparency in costs as the seller covers export duties, inland transportation, freight, and unloading. The buyer can accurately estimate subsequent costs, including import duties and inland transit.

Flexibility in Delivery Location:

DAT allows for a variety of delivery locations, such as ports, terminals, or warehouses, providing flexibility that suits different trade scenarios.

Challenges of DAT Incoterms

While DAT (Delivered At Terminal) offers clarity and flexibility in shipping responsibilities, it comes with notable challenges:

• Limited Delivery Scope: DAT restricts delivery to terminals, which might not align with the buyer’s preferred location, causing additional transportation costs and logistical hurdles.

• Unloading Obligations: The seller must handle unloading, potentially leading to delays or disputes if the terminal lacks proper facilities or coordination.

• Customs Complexity: The buyer handles import duties and procedures, which can be overwhelming for those unfamiliar with local regulations.

FAQs on DAT Incoterms

Conclusion

DAT Incoterms 2020 simplifies international trade by clearly defining the roles of sellers and buyers. While the seller bears significant responsibilities until unloading, the buyer must manage import proceedings and post-delivery logistics. By understanding and properly implementing DAT terms, businesses can ensure smoother and more efficient trade operations.

Also Read: INCOTERMS or INTERNATIONAL COMMERCIAL TERMS – Everything You Need to Know