What are the Risks Associated with DDP, DAT, and DAP Incoterms?
Although each incoterm has been designed to protect the interests of the buyer, some risks come along with DDP, DAT, and DAP transactions that are worth bearing in mind when you consider your shipping options.
With each deal, there may be miscommunications that occur between the different parties, which lead to costly delays or even disputes. It’s always important to establish who is responsible for documentation, such as insurance, cargo information, and customs clearance.
Naturally, with the transportation of any goods, there is an inherent danger of goods becoming damaged during transit, which can lead to financial losses and compensation depending on the severity of the damage. There is also the potential that a buyer fails to pay for the shipment, or the seller does not deliver the cargo on time.
Compliance risks can also occur in instances where the buyer does not adhere to the location-specific rules and regulations. This may lead to fines, penalties, or in the worst cases, even legal action.
To ensure these risks do not become a reality, all parties involved in shipping transactions of this nature should take the time to review all documents and communicate clearly with the buyer/seller in question throughout the process.
