What Is Delivered Ex-Ship (DES)?
Delivered ex-ship is a delivery term in international trade where the seller completes their obligation to the buyer when they hand over the possession of goods at an agreed port of destination or specific delivery terminal. The buyer is responsible for taking control of the goods and paying any import duties, and unloading costs, as well as arranging and paying for transport from the port to their desired location.
Hence, the seller assumes responsibility for the goods until they are delivered to the shipping lines. Buyers are responsible for securing and paying for their own shipping arrangements. The term was discontinued in the latest revision of Incoterms in 2011 and replaced with delivered at the terminal (DAT), which is similar but does include the obligation for the seller to unload the goods. DAP or delivered at place (CIP) is another alternative term for DES. all the costs ex quay
Delivered Ex Ship (DES) is an Incoterms rule that stipulates that the seller must pay for all costs and risks associated with delivering the goods to the named port of destination. The buyer is responsible for arranging and paying for the onward carriage from there.
This rule is used when the buyer wants the goods delivered to a destination port, and doesn’t want the seller to be responsible for arranging onward transport. It’s important to note that the DES rule doesn’t include any obligations on the part of the seller to unload the goods at the destination port.
Meaning of Delivered Ex-Ship
International transportation contracts frequently include abbreviated trade phrases that describe aspects such as the time and place of delivery, payment, when the risk of loss shifts from seller to buyer, and who pays for freight and insurance expenses. DES was just one variant of an international trading contract. A contract of sale is a legal term, and the precise definition varied somewhat by nation. However, generally, the seller was responsible for the goods until they were delivered. It bore the expenses and dangers involved with transporting goods to port.
The term delivered ex-ship meant that the seller delivered the goods on board a ship at the port of destination named in the contract. The buyer was responsible for taking control of the goods from that point, including paying import duties and unloading costs. Further, the buyer was responsible to arrange and pay for transport from the port to the desired location. Shipping lines typically have standard contracts with buyers that state that the buyer is responsible for these costs. Charter shipping is a type of sea shipping in which the buyer pays for the use of a ship for a specific period of time. The seller delivers the goods to the port of export, and the buyer pays for the transport costs as well as packaging costs to get the goods from the port of export to their final destination.
Inland waterways are used for global trade and are a type of sea or inland waterway transportation. Inland waterways are a cheaper and more fuel-efficient way to transport goods than by land. The seller delivers the goods to the port of export, and the buyer pays for the transport and packaging costs to get the goods from the port of export to their final destination.
Incoterms Rules (International Commercial Terms)
These rules are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) that are widely used in international commercial transactions. Incoterms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer. They are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and shipping of goods. The use of Incoterms rules promotes a common understanding of international contract terms among the parties and reduces misunderstandings, disputes, and confusion.
Sellers Obligations
Some of the obligations of sellers are
1. Provision of goods in conformity with the contract
The seller must provide the buyer with goods that conform to the contract of sale.
2. Licenses, authorizations, and formalities
The seller must obtain any export or import licenses and other official permissions and must comply with all regulations and formalities required in order to enable the delivery of the goods. The costs incurred in doing so are for the account of the seller.
3. Contracts of carriage and insurance
The seller must enter into contracts of carriage and take out insurance cover up to the point where the risks have been transferred to the buyer in accordance with Incoterms 2010, as well as any subsequent transit to reach the named destination. The costs and risks associated with transport are for the account of the seller until that point.
4. Delivery
The seller must make the goods available to the buyer at the named port of destination on the date or within the period stipulated in the contract. The buyer is responsible for taking delivery of the goods and for paying any costs related to taking delivery, such as unloading and reloading costs.
5. Transfer of risks
The risks associated with the goods are transferred from the seller to the buyer when the goods are delivered at the named port of destination in accordance with Incoterms 2010.
6. Division of costs
The buyer is responsible for paying the cost of carriage from the port of departure to the named port of destination, as well as any import duties and taxes. The seller is responsible for all other costs related to supplying the goods, including export duties and taxes.
7. Notice to the buyer
The seller must give notice to the buyer that the goods are ready for shipment within the period stipulated in the contract. If no such period is stipulated, then notice must be given as soon as the goods are ready for shipment.
8. Proof of delivery, transport document, or equivalent electronic message
The seller must provide the buyer with proof of delivery of the goods, such as a transport document or an equivalent electronic message, in accordance with Incoterms 2010.
9. Checking – packaging – marking
The seller is responsible for checking, packing, and marking the goods in accordance with any applicable laws and regulations, and also in accordance with any instructions received from the buyer.
10. Other obligations
The seller must provide all information and documents relating to the delivered goods that may be reasonably requested by the buyer. This includes, but is not limited to, information and documents relating to the quality, quantity, weight, dimensions, packing, marking, and delivery of the goods.
Buyer’s Obligations
The buyer’s responsibility revolves around the following obligations
1. Payment of the price
The buyer must pay the purchase price for the delivered goods in accordance with the terms of the contract.
2. Licenses, authorizations, and formalities
The buyer must obtain any export or import licenses and other official permissions and must comply with all regulations and formalities required in order to take delivery of the goods. The costs incurred in doing so are for the account of the buyer.
3. Contracts of carriage and insurance
The buyer must enter into contracts of carriage and take out insurance cover from the point where the risks have been transferred to the buyer in accordance with Incoterms 2010, as well as any subsequent transit to reach the final destination. The costs and risks associated with transport are for the account of the buyer from that point.
4. Taking delivery
The buyer must take delivery of the goods at the named port of destination on the date or within the period stipulated in the contract. The buyer is responsible for paying any costs related to taking delivery, such as unloading and reloading costs.
5. Transfer of risks
The risks associated with the goods are transferred from the seller to the buyer when the goods are delivered at the named port of destination in accordance with Incoterms 2010.
6. Division of costs
The buyer is responsible for paying the cost of carriage from the port of departure to the named port of destination, as well as any import duties and taxes. The seller is responsible for all other costs related to supplying the goods, including export duties and taxes.
7. Notice to the seller
The buyer must give notice to the seller of its intention to take delivery of the delivered goods within the period stipulated in the contract. If no such period is stipulated, then notice must be given as soon as the buyer is ready to take delivery.
8. Proof of delivery, transport document, or equivalent electronic message:
The buyer must provide the seller with proof of delivery of the delivered goods, such as a transport document or an equivalent electronic message, in accordance with Incoterms 2010.
9. Inspection of goods
The buyer must inspect the delivered goods on arrival at the named port of destination and must give notice to the seller of any defects or shortages within a reasonable period of time.
10. Other obligations
The buyer must provide all information and documents relating to the delivered goods that may be reasonably requested by the seller. It comprises, but is not restricted to licenses, authorizations, and other official permissions, as well as information and documents relating to quality, quantity, weight, dimensions, packing, marking, and delivery of the goods.
Example of DES
Contract
(Seller) ______________________________ hereby sells to (Buyer) ______________________________ the following goods:
Description of Goods: ___________________________________________________
Quantity: _______________________________________________________________
FOB Price: ______________________________________________________________
The delivered ex ship terms shall be applied to this contract, and the seller shall deliver the goods to the buyer at the port of ______________________________ on or before ______________________________. The buyer shall pay the purchase price for the delivered goods in accordance with the payment terms stipulated in this contract. The buyer is responsible for obtaining any export or import licences and other official permissions required in order to take delivery of the delivered goods, as well as for complying with all regulations and formalities related to the delivered goods. The buyer shall take delivery of the delivered goods at its own risk and expense and shall be responsible for all costs associated with taking delivery of the delivered goods, including but not limited to unloading and reloading costs. The risks associated with the delivered goods shall be transferred from the seller to the buyer when the delivered goods are delivered at the port of ______________________________ in accordance with Incoterms 2010.
This contract shall be governed by and construed in accordance with the laws of ______________________________.
Signed by:
___________________________________________________ (Seller)
___________________________________________________ (Buyer)
Date: ______________________________
Replacements for Delivered Ex-Ship (DES)
Some of the similar terms you might see instead of delivered ex-ship (DES) are as follows
- DAT – Delivered at terminal
- DAP – Delivered at the place
- DDP – Delivered duty paid
- FAS- Free alongside ship
- FOB – Free on board
- CFR – Cost and freight
- CIF – Cost, insurance, and freight
- DEW – Delivered ex-works
- EXW – Ex-works
Note: You might see other terms used in place of delivered ex-ship (DES), but these are some of the most common.
Conclusion!
This was all about delivered ex ship terms of delivery. It is one of the many Incoterms used in international trade. You should use this term only if both parties have a clear understanding of its meaning and implications, as well as the responsibilities of each party under this term.
What do you think about delivered ex ship terms? Do you have any questions? Let us know in the comments below!
