Key Takeaways
- Delivered Ex Ship (DES) is an outdated Incoterm where the seller is responsible for all costs and risks until the goods are on board the ship at the named destination port.
- Under DES, the buyer assumes responsibility for unloading, import clearance, and further transport once the goods are available on the ship.
- This term was removed from Incoterms 2010 due to ambiguity regarding unloading responsibilities, replaced by clearer terms like Delivered at Terminal (DAT) and Delivered at Place (DAP).
- Understanding the differences between DES, DAT, and DAP is crucial for managing responsibilities and risks in international shipping.
What is Delivered Ex Ship (DES)?
Delivered Ex Ship (DES) is an outdated Incoterm that was utilized in international trade to define the obligations of sellers and buyers. Under DES, the seller delivers goods by making them available on board the ship at the named port of destination. The seller bears all costs and risks associated with the goods until they reach this point, after which the buyer assumes responsibility for unloading, import clearance, and further transportation.
This term was part of the Incoterms 2000 guidelines and has since been removed in the 2010 edition due to ambiguities regarding unloading responsibilities. Understanding DES is essential for anyone studying international shipping practices and responsibilities.
- Seller is responsible for export clearance and transportation costs.
- Risk is transferred when goods are on board the ship.
- Applies only to sea or inland waterway transport.
Key Responsibilities Under DES
In a DES transaction, both the seller and buyer have distinct responsibilities that are crucial for smooth operations. The seller must provide conforming goods, handle export clearance, and bear all risks and costs until the goods are on board the ship at the named port. This includes providing necessary transport documents, such as a bill of lading.
On the other hand, the buyer is responsible for unloading the goods from the ship, managing import customs clearance, and paying any import duties or taxes. The transfer of risk occurs when the goods are available on board the ship, which means the buyer takes on risks associated with unloading and further transport once the ship arrives.
- Seller's obligations include:
- Providing conforming goods and transport documents.
- Handling export clearance and costs up to the ship.
- Buyer's obligations include:
- Unloading goods and clearing customs.
- Managing onward transport risks.
How It Works
Delivered Ex Ship (DES) operates on a straightforward principle where the seller fulfills their obligations until the goods are made available on board the ship. For instance, if a seller in Asia ships perishable foods to a buyer in the U.S., under DES, the seller would cover all costs, including ocean freight and export formalities, until the goods are accessible on the ship at the New York Port.
Once the goods are on board, the responsibility shifts to the buyer, who then must unload the goods, clear customs, and handle any damage that may occur during unloading. This model allows the seller to manage risks associated with the ocean freight, while the buyer gains control over the unloading and import processes.
Examples and Use Cases
Understanding practical examples of DES can enhance your grasp of its application in international trade. Here are a few scenarios that illustrate how DES functions:
- A seller in Europe sells machinery to a buyer in South America under DES terms; the seller handles shipping costs until the machinery is on board the vessel in Europe.
- A supplier in Asia ships textiles to a retailer in the U.S. under DES. The supplier bears all costs and risks until the textiles are on board the ship at the U.S. port.
- A company in Africa exports coffee beans to Europe under DES terms, taking care of all logistics until the beans are available on the ship.
Important Considerations
While DES was useful in its time, it has been phased out in favor of clearer terms such as Delivered at Terminal (DAT) and Delivered at Place (DAP). These newer terms address the ambiguities related to unloading responsibilities that were present in DES. Therefore, it is crucial for you to be aware of these changes when engaging in international trade.
Choosing the right Incoterm is vital for minimizing risks and ensuring clarity in shipping agreements. If you are involved in shipping goods, it is advisable to understand the implications of these terms and select those that best suit your logistical and financial requirements.
For more information on the evolution of shipping terms, consider checking out our article on Incoterms.
Final Words
As you navigate the complexities of international trade, understanding Delivered Ex Ship (DES) not only enriches your knowledge of shipping terms but also empowers you to make informed decisions about risk management and cost allocation. While DES may be outdated, the principles behind it highlight the importance of clarifying responsibilities between buyers and sellers. Keep this framework in mind as you engage in global commerce, and consider deepening your expertise by exploring the more current terms like DAT and DAP that offer clearer guidelines for your shipping arrangements. Your proactive approach to learning will undoubtedly enhance your effectiveness in the ever-evolving marketplace.
Frequently Asked Questions
Delivered Ex Ship (DES) is an outdated Incoterm where the seller delivers goods on board the ship at the named port of destination. The seller bears all costs and risks until that point, after which the buyer assumes responsibility for unloading and further transportation.
Under DES, the buyer is responsible for unloading the goods from the ship once they are available on board. This means the buyer must also handle import customs clearance and manage any subsequent transport.
The seller is responsible for all costs associated with delivering the goods to the ship at the destination port. This includes export clearance, ocean freight, and any chosen insurance until the goods are on board.
The risk transfers from the seller to the buyer when the goods are made available on board the ship at the named port of destination. This occurs before the buyer unloads the goods.
DES was removed in 2010 due to ambiguities regarding the responsibilities for unloading goods from the vessel. It was replaced by clearer terms like DAT (Delivered at Terminal) and DAP (Delivered at Place).
The main differences lie in the delivery point and unloading responsibilities. DES requires the buyer to unload at the ship, while DAT involves unloading at a terminal, and DAP requires unloading at a specified place, with each term defining different risk transfer points.
Sure! For instance, if a seller in Asia ships perishable foods to a U.S. buyer under DES to New York Port, the seller covers all costs until the goods are on board. After that, the buyer is responsible for unloading, customs clearance, and further transportation.
