Q168: DAP and unpacking in transit.

Q168: We buy Incoterms ‘DAP City Deep’ but the groupage container was unpacked in Durban. Who pays for unpacking during transit: the seller or the buyer?

A168: DAP (Delivered At Place) ends ‘on the delivering vehicle’ at the named place, and the incomplete address “City Deep” is vague. The place could be read as the City Deep railhead (and thus the delivering vehicle is the train), or a container unpacking depot located in City Deep (and thus the delivering vehicle is a truck), and the answer has a cost implication which should not be dismissed.

Given that this is groupage (part load) container, City Deep ‘railhead’ could create even further complications, and although it would not impact on the question, “DAP City Deep, Johannesburg [named container depot]” might be a more appropriate and clearer phrasing.

DAP may be understood by seeing two distinctly different types of cost arising in the execution of the term, after the initial arrival of the cargo in the destination country, and prior to any on-carriage to the named ‘place’.

These two considerations are ‘physical’ costs linked to physical movement and ‘administrative’ costs linked to the process of customs clearing. These, as mentioned, arise in the destination country, with the seller being liable for all costs of any nature prior to this moment of initial arrival.

Unmodified, DAP means that the seller pays all physical costs to the named place. In your example, the discharge from the vessel (THC) the port dues, any cross-haulage to the on-carrying vehicle and all transport charges to Johannesburg City Deep would be for the seller’s account, as would any charge raised by the freight forwarder or carrier applicable to that process e.g. their handling and documentation fees.

The buyer would be liable for all administrative costs from first arrival in the destination country – i.e., the customs clearance, the clearing agent’s charges for this service, and all and any customs duty or taxes as and if applicable (be careful not to confuse port dues within this, port dues are for the seller’s account).

In your model and under general conditions, the unpacking of a containerised shipment would commonly happen at the named place and the buyer’s physical costs would begin with the unpacking charges. If it was the intention of the parties that the seller bears this cost, the term DPU (Delivered at Place Unloaded), would have been used.

There is no guidance in the text of the Incoterms Rules as to the allocation of this cost if the seller elects to incur it before the final destination – your outline implies the container was unpacked in Durban, en route to City Deep while under the control of the seller. This may be a cost that the parties will need to negotiate if the buyer was consulted, or if the buyer requested the premature unpack.

But, if the unpacking was undertaken without the buyer’s knowledge or influence, then in a strict reading of DAP it would be the seller’s cost if they prematurely unpack, although the buyer still has the burden of costs to remove the unpacked goods from the ultimate delivering vehicle (at City Deep, however the parties interpret that location).

Costs associated in the disposal of the empty container – cleaning, turn-in fees etc. – are not addressed in the Incoterms Rules and would need to be separately negotiated. Again, under general conditions these would be for the seller, but the carrier may well invoice the consignee or importer, who in their role as buyer may have recourse to the seller, unless the terms of the sale contract dictate otherwise.