Charging freight on DAP shipments

Question

Our UK factory ship goods to Sweden using DAP incoterms. On our sales order and invoice we charge for the goods but also an amount to cover our freight costs.
Our Swedish sales office have now said that DAP includes the shipping cost and that we cannot pass the freight costs on under DAP terms and that we must change to EXW.
Please could someone confirm if this is correct?

Answer

Hi there,

I hope you get an answer to your question shortly.

In the meantime, I recommend also looking at the Institute of Export and International Trade’s helpdesk for more specific advice:

http://www.export.org.uk/page/Export_Helpline

Answer

Hi,

I believe that your customer is correct.  Based on the DAP delivery term it is my understanding that the seller is responsible for the cost of freight to the named destination. There is therefore a consideration to the named place of destination on your contract with your customer i.e. is it the port or airport nearest the customer, the city or perhaps their warehouse.

To handle the cost of the freight your pricing of goods for DAP and ex-works could be different.

I hope that helps,

Kind regards,
Ian James
ian.james@i2i-infinity.co.uk

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