Understanding DES (Delivered Ex Ship) Incoterms: A Comprehensive Guide

What is DES (Delivered Ex Ship) Incoterms?

The Incoterm DES, or "Delivered Ex Ship," is a legacy rule from the Incoterms 2000 set that defined specific responsibilities for buyers and sellers in international trade. While DES has been superseded by newer Incoterms rules (specifically DAT and DAP in Incoterms 2010, and DAP and DPU in Incoterms 2020), understanding its principles remains valuable for businesses dealing with older contracts or those seeking to grasp the evolution of shipping terms. DES placed a significant burden on the seller, requiring them to deliver goods to the named port of destination, but before the goods were unloaded from the vessel.

Under DES, the seller was responsible for all costs and risks associated with bringing the goods to the agreed-upon port of destination. This included export customs clearance, all freight charges (ocean or air), and any transit risks up to the point where the goods were available to the buyer on board the ship at the destination port. The buyer then took over the responsibility for unloading the goods, import customs clearance, and onward transportation to their final destination.

Ocean Cargo, with over 25 years of experience in global logistics, understands the nuances of all Incoterms rules, both current and historical. Our expertise ensures that whether you're navigating a new contract or reviewing an older one, your shipments are handled with precision and compliance.

Key Responsibilities Under DES (Seller vs. Buyer)

To fully grasp the implications of DES, it's crucial to delineate the responsibilities of both the seller and the buyer:

Seller's Responsibilities:

• Export Packaging: Ensuring goods are appropriately packed for international transit.
• Loading Charges: Costs associated with loading goods onto the first carrier.
• Delivery to Port/Place of Shipment: Transporting goods to the port of origin.
• Export Customs Formalities: Handling all export licenses, duties, and taxes.
• Main Carriage (Freight): Paying for the primary transportation (e.g., sea freight or air freight) to the named port of destination.
• Risk Transfer: Bearing all risks of loss or damage to the goods until they are made available to the buyer on board the vessel at the destination port.
• Proof of Delivery: Providing the buyer with the necessary documents to take possession of the goods.

Buyer's Responsibilities:

• Unloading at Destination Port: Arranging and paying for the unloading of goods from the vessel.
• Import Customs Formalities: Handling all import licenses, duties, taxes, and other customs clearance procedures in the destination country.
• Onward Carriage: Arranging and paying for the transportation of goods from the destination port to their final warehouse or facility.
• Risk Transfer: Assuming all risks of loss or damage to the goods once they are made available on board the vessel at the destination port.

The critical point of risk transfer under DES was the moment the goods were available to the buyer on board the ship at the named port of destination, but before unloading. This meant the seller bore the risk of the entire journey across the ocean, but the buyer was responsible for the potentially complex and costly process of unloading.

Why DES Was Replaced: The Evolution of Incoterms

The Incoterms rules are periodically updated by the International Chamber of Commerce (ICC) to reflect changes in global trade practices, technology, and security concerns. DES, along with DEQ (Delivered Ex Quay), was removed in Incoterms 2010 due to several factors:

1. Ambiguity in Unloading: The distinction between "on board the ship" and "on the quay" (as in DEQ) could sometimes lead to confusion regarding who was responsible for the actual unloading process and associated costs.
2. Containerisation: With the rise of container shipping, the concept of goods being "on board the ship" at the destination port became less practical for risk transfer. Containers are often moved directly from the vessel to a terminal, where they might sit for some time before being unloaded.
3. Desire for Simplicity: The ICC aimed to simplify the rules and make them more universally applicable across different modes of transport.

DES was largely replaced by DAP (Delivered at Place) and DAT (Delivered at Terminal) in Incoterms 2010. DAT specifically addressed delivery to a terminal (including a quay), while DAP covered delivery to any named place. In Incoterms 2020, DAT was further refined and renamed DPU (Delivered at Place Unloaded) to clarify that the seller is responsible for unloading at the named place.

Ocean Cargo's customs compliance experts are always up-to-date with the latest Incoterms 2020 rules, ensuring your contracts are robust and your shipments proceed without unexpected costs or delays.

When Might You Still Encounter DES?

While DES is no longer part of the current Incoterms 2020 rules, there are specific scenarios where you might still encounter it:

• Older Contracts: If you are dealing with long-term supply agreements or historical contracts that predate Incoterms 2010, they might still reference DES. It's crucial to understand the original intent and responsibilities in such cases.
• Specific Industry Practices: In some niche industries or regions, older practices might persist, or parties might explicitly agree to use a modified version of a legacy Incoterm. However, this is rare and generally not recommended due to the potential for disputes.
• Educational Context: Understanding DES helps in comprehending the evolution of Incoterms and the rationale behind the current rules.

If you encounter DES in any documentation, it is imperative to seek expert advice to clarify the exact obligations and liabilities. Ocean Cargo can provide consultative support to interpret complex shipping terms and ensure your interests are protected, whether you're shipping excavators and diggers to the UAE or wind turbine components to Australia.

Choosing the Right Incoterm for Your Shipments

Selecting the appropriate Incoterm is one of the most critical decisions in international trade, as it directly impacts costs, risks, and responsibilities. While DES is obsolete, the principles it embodied – particularly the seller's responsibility for main carriage – are still relevant in modern Incoterms like DAP and DPU.

When choosing an Incoterm, consider the following:

• Your Expertise: Are you comfortable managing import customs and local delivery in the destination country? If not, a "D" group Incoterm (like DAP or DPU) where the seller handles more of the journey might be preferable.
• Buyer's Expertise: Does your buyer have the capability and experience to manage unloading and import formalities?
• Cost Control: Who is best positioned to negotiate favourable freight rates and manage logistics efficiently?
• Risk Tolerance: How much risk are you willing to assume for loss or damage to the goods?
• Nature of Goods: Are the goods particularly fragile, valuable, or subject to complex customs regulations?

Ocean Cargo offers tailored advice on Incoterms, helping you select the best option for your specific trade lane and cargo. Our comprehensive road freight, sea freight, and air freight services, combined with expert customs brokerage for the USA and other key markets, ensure seamless execution regardless of the chosen Incoterm.