What Is Delivered Ex Ship (DES)?
Delivered ex-ship (DES) was a trade term that required a seller to deliver goods to a buyer at an agreed port of arrival. The seller met its obligation upon delivery of uncleared goods in a designated port. It assumed the full cost and risk involved in getting the goods to that point, at which time it was available to the buyer and the buyer assumed all ensuing costs and risks.
This term applied to both inland and sea shipping and often in charter shipping. It expired effective 2011. DES is a legal term, and the exact definition can differ somewhat by country.
Delivered Ex Ship (DES) Explained
Contracts involving international transportation often contain abbreviated trade terms that describe details such as the time and place of delivery, payment, at what point the risk of loss shifts from the seller to the buyer, and who pays for the costs of freight and insurance. DES was just one type of such an international trade contract.
- Delivered ex-ship (DES) was a trade term that required a seller to deliver goods to a buyer at an agreed port of arrival.
- DES was an incoterm that applied to both inland and sea shipping and often in charter shipping. It expired effective 2011.
- DES is a legal term, and the exact definition can differ somewhat by country.
Incoterms Define Shipping Terms
The most commonly known trade terms are known as "incoterms," short for "international commercial terms." The International Chamber of Commerce (ICC), an organization, publishes them aiming to foster trade and commerce internationally. ICC promotes and protects open markets for goods and services.
Incoterms are often identical in form to domestic terms such as the American Uniform Commercial Code (UCC), but they have different meanings. Parties to a contract must expressly indicate the governing law of their terms as a result.
Typically, the seller remains responsible for products until delivery. It bears the costs and risks that come with bringing goods to port. The seller has total responsibility for shipping, and it must pay the shipping company and purchase insurance for the goods.
The seller's obligation ends when it delivers the merchandise to the agreed upon port, aboard the ship, not yet cleared for import. Buyers are responsible for all costs to receive and unload the goods, and to clear them through customs.
Delivered Ex Ship Versus Ex Quay and Ex Works
Delivered Ex Ship differs from Delivered Ex Quay (DEQ) and Ex Works (EXW). Delivered Ex Ship (DES) stipulates that the seller has a legal obligation to deliver the goods to port and to ensure the goods' arrival there, but not to a wharf.
Delivered Ex Quay specifies that the seller must ship the goods to the wharf at the destination port. Delivered Ex Quay can note a duty as either paid or unpaid. The seller is obligated to cover costs, like duties, if it pays and is responsible for providing the merchandise. If unpaid, those obligations and responsibilities shift to the buyer.
The seller must make the goods available for pickup at its place of business in Ex Works. All costs and risks of transportation are taken on by the buyer from there.
Real World Examples of Delivered Ex Ship
Seller X ships contracted goods to a pier and port in Kennebunkport, Maine. Midway there, the ship encounters a storm sinks. Seller X absorbs the loss because the shipment has not yet arrived in port.
Alternatively, Seller X's shipment makes it safely to Kennebunkport. The storm hits while the ship is docked after the point when Buyer Y has contractually taken possession of the products. The ship sinks in port. Buyer Y absorbs the loss because it has accepted delivery, even though the goods have not yet left the ship.