What is Delivered Ex-Ship (DES)? — a concise definition
– Delivered ex-ship (DES) was an international trade term used in sales contracts to allocate who pays for transport and who bears the risk of loss for goods shipped by sea (or inland waterway). Under DES the seller was responsible for moving the goods all the way to a specifically named port of arrival and carried costs and risks up to that point. The seller’s duty ended when the goods had arrived at the agreed port on board the vessel; from that moment the buyer took on costs and risks (including unloading, import clearance and onward transport). DES was removed from the official Incoterms rules in 2011.
Key jargon (defined)
– Incoterms: short for “international commercial terms,” a set of standardized trade terms published by the International Chamber of Commerce (ICC) that clarify delivery obligations, costs and risk transfer between buyer and seller.
– Port of destination: the named port where seller must deliver the goods under a DES contract.
– Quay (or quay/wharf): the structure at a port used for loading/unloading ships; delivered ex-ship did not require delivery to the quay itself.
– Risk of loss: who bears the financial consequence if goods are damaged or destroyed.
Why DES mattered
– DES was a concise way to state that the seller would get goods all the way to the arrival port and carry the risk until arrival. That differs from terms where responsibility shifts earlier (for example, Ex Works) or where the seller must also unload and clear goods for import.
Seller vs. buyer responsibilities — short checklist
Seller obligations under DES
– Contract the sea carriage to bring goods to the named port of arrival.
– Pay sea freight and related transport costs up to arrival.
– Arrange and pay for insurance and carriage costs (if contract requires).
– Keep the goods and bear risk until the goods have arrived at the agreed port and are on board or alongside the ship as defined by the contract.
– Deliver goods aboard the importing ship at the named port (but not necessarily unload or clear for import).
Buyer obligations under DES
– Arrange and pay for unloading at arrival port.
– Handle and pay for import formalities, duties and any local taxes.
– Arrange inland transport from the arrival port to the final destination.
– Bear all risk of loss or damage from the moment the goods have been delivered at the named port.
How risk and cost allocation worked (summary)
– Risk: With DES, seller bore risk until the goods reached the named arrival port; risk transferred to buyer at arrival.
– Costs: Seller covered transportation up to arrival. Buyer paid unloading, import clearance, duties and transport beyond the arrival port.
How DES differed from related terms
– Delivered ex-quay (DEQ, also discontinued): seller delivered to the quay (wharf). If the seller paid duties (DEQ paid), they covered import duties; if unpaid, buyer did.
– Ex Works (EXW): seller makes goods available at seller’s premises. Buyer takes on virtually all transport costs and risk after pickup.
– Replacement terms after DES was removed in 2011: Delivered at Terminal (DAT) — seller delivers and unloads at a named terminal; Delivered at Place (DAP) — seller delivers to a named place, but not unloaded. These are the modern alternatives under current Incoterms.
Contract checklist if you encounter DES wording
1. Confirm the exact named port of arrival and whether “shipboard” vs. “alongside” is specified.
2. Verify who must pay insurance and whether any insurance minimum is required.
3. Clarify who is responsible for unloading and for customs clearance and duties.
4. If the contract is governed by a particular law, ensure the parties understand how local law treats DES.
5. Consider updating to a current Incoterm (DAT/DAP or another) to avoid ambiguity, or add explicit clauses resolving common DES gaps.
Worked numeric example
Assumptions:
– Goods value (invoice price): $50,000
– Seller pays sea freight to arrival port: $4,000
– Seller pays marine insurance to arrival: $300
– Buyer pays unloading at port: $800
– Import duty: 3% of goods value = $1,500
– Buyer pays inland transport after port: $600
Scenario A — Loss occurs in transit before arrival:
– Seller has paid freight ($4,000) and insurance ($300). Seller bears loss of the goods and the financial shortfall for value $50,000 (assuming insurance does not fully cover the loss). Buyer pays none of the arrival costs.
Scenario B — Loss occurs after arrival but before unloading:
– Risk has transferred at arrival, so buyer bears the loss. Buyer still must pay unloading ($800), duties ($1,500) and inland transport ($600). Seller’s exposure ceases at the point of
arrival at the named port of destination — i.e., when the goods are placed at the buyer’s disposal on board the arriving ship. From that moment the buyer bears risk (the financial loss of the goods) and the costs of unloading, import customs clearance and any onward transport.
Worked numeric recap (Scenario B)
– Goods value lost after arrival: $50,000 (buyer bears this).
– Buyer pays unloading at port: $800.
– Buyer pays import duty (3% of goods value): $1,500.
– Buyer pays inland transport after port: $600.
– Buyer’s total immediate cost after loss = $50,000 + $800 + $1,500 + $600 = $52,900.
Key obligations under DES (Delivered Ex Ship)
– Seller obligations (typical): arrange and pay carriage to the named port of destination; deliver goods on board the arriving ship and place them at buyer’s disposal; obtain export clearance and documentation required for carriage; bear risk up to arrival on board at the named port.
– Buyer obligations (typical): arrange and pay unloading from the ship at destination; perform import customs formalities and pay duties/taxes; collect and arrange onward carriage and insurance from the port; bear risk from arrival on board at the named port.
Practical checklist — Seller
1. Specify exact named port of destination and expected arrival window in the sales contract.
2. Arrange and pay for sea freight and export formalities.
3. Obtain and keep bills of lading and export documents proving arrival on board.
4. Decide whether to buy marine insurance (seller’s choice, but insurance does not change risk transfer point).
5. Communicate arrival notice to buyer promptly so buyer can arrange unloading/import.
Practical checklist — Buyer
1. Confirm contract names the correct port (no ambiguity).
2. Be ready to accept risk as soon as goods arrive on board; arrange insurance if you want protection from that point.
3. Prepare to pay unloading, import customs clearance and duties.
4. Have inland transport and terminals booked to avoid demurrage or storage charges.
5. Require clear documentation (arrival notice, bill of lading) to prove delivery timing.
Legal and commercial notes
– DES applies only to sea and inland waterway transport and requires the goods to be made available on board the arriving ship at the named port of destination.
– Under DES the seller is not required to clear the goods for import or pay import duties; that remains the buyer’s responsibility.
– Insurance: neither party is automatically required to insure under DES. Because risk passes at arrival, buyers commonly arrange insurance covering loss or damage from that point; sellers may insure to arrival if they wish.
Current usage and modern alternatives
– DES is an older Incoterm that was used in prior editions of Incoterms. In modern practice (Incoterms 2010 and 2020) parties typically use alternatives that better match their needs:
– DAP (Delivered at Place) — seller delivers when goods are placed at the buyer’s disposal at a named place (not unloaded); useful for multimodal transport.
– DPU (Delivered at Place Unloaded; introduced in Incoterms 2020 as a replacement for DAT) — seller delivers and unloads at a named terminal or place.
– DDP (Delivered Duty Paid) — seller delivers and pays import duties and taxes (maximum seller obligation).
– If you see DES in a contract today, clarify with the counterparty whether they mean the historical DES rule or intend one of the modern D-terms. Explicit wording (named port, exact delivery point, and responsibility split) reduces disputes.
Sample simple clause wording (illustrative, not legal
): Sample clause wording (illustrative, not legal):
– Seller agrees to deliver the goods “DES [named port of discharge]” meaning delivery shall be completed when the goods are made available to Buyer alongside the arriving vessel at [named port], duty unpaid and not unloaded. Risk of loss or damage transfers to Buyer when goods are alongside the ship at the agreed berth. Seller shall procure and pay for carriage to the named port and provide Buyer with the following documents: clean onboard bill of lading consigned to order, commercial invoice, and packing list. All costs and risks of unloading, import clearance, import duties and taxes, and inland carriage from the port of discharge are for Buyer’s account.
Explanatory notes (key terms)
– DES (Delivered Ex Ship): historically an Incoterm meaning the seller delivers when goods are placed alongside the vessel at the named port; seller pays carriage but not import duties or unloading. Risk normally shifts at that point (before unloading).
– “Alongside the ship”: physically at the ship’s rail or berth; not unloaded from the vessel.
– Onboard bill of lading: shipping document that confirms goods were loaded on board; under DES the seller must obtain one showing carriage to the named port.
– Duty unpaid / import clearance: under historical DES the buyer handles import customs and pays duties.
Checklist for drafting or clarifying a contract that uses “DES”
1. Confirm the exact named port and the berth or terminal (avoid broad terms like “anyport”).
2. Specify whether “alongside the ship” or “at the quay/terminal” — explicitly state whether unloading is included.
3. State when risk transfers (e.g., “risk transfers to Buyer when goods are placed alongside vessel at [location]”).
4. Identify who pays for:
– Sea carriage to the named port.
– Unloading at destination.
– Import customs clearance, duties and taxes.
– Inland transport after discharge.
5. Require specific documents: onboard bill of lading, commercial invoice, packing list, certificate of origin (if needed).
6. Allocate responsibility for insurance (who arranges and pays, and minimum coverage if required).
7. Add an Incoterms alternative clause (e.g., list equivalent modern D-term) and a fallback if parties meant a different rule.
8. Include dispute-resolution jurisdiction and language of contract.
Negotiation tips
– If you are the buyer, insist the seller confirm whether unloading and customs clearance are included. If not, quantify likely costs at the named port and factor into your landed cost.
– If you are the seller, document delivery precisely and obtain an onboard bill of lading that evidences delivery to the named port. Limit exposure by clarifying when risk passes.
– Consider using a modern Incoterm (DAP, DPU, or DDP) instead of DES to reflect current global practice and reduce ambiguity.
Worked numeric example (illustrative)
Assume goods invoice price = $10,000.
Seller costs:
– Inland transport to port of export = $300
– Sea freight to named port = $700
Total seller cost under DES = $10,000 (goods) + $300 + $700 = $11,000 (seller pays carriage but not unloading or import duties).
Buyer costs at destination:
– Unloading at port = $200
– Import duties = 5% of goods value = $500
– Import clearance and local taxes = $100
– Inland delivery to buyer = $150
Total buyer additional cost = $950
Landed cost to buyer = goods price $10,000 + buyer additional cost $950 = $10,950.
Net comparison if parties had used DDP (Delivered Duty Paid): the seller would bear import duties and most destination costs; the buyer’s landed cost would equal seller’s invoice if seller absorbs destination charges. This example shows why clear allocation of destination costs matters for pricing and competitiveness.
Common risks & who bears them (under historical DES)
– Damage while aboard or before goods are alongside ship: seller’s risk.
– Damage after goods are alongside ship but before unloading: typically buyer’s risk (unless contract states otherwise).
– Delays and costs for unloading or customs clearance: buyer’s responsibility unless contract shifts that obligation.
When you see “DES” today
– Treat it as potentially outdated. The International Chamber of Commerce’s Incoterms rules replaced DES with more modern D-terms (DAP, DPU, DDP) in recent editions.
– Always ask the counterparty to confirm which delivery rule they intend and restate the exact responsibilities in the contract language.
– If parties prefer historical DES mechanics, write a detailed clause covering place of delivery, transfer of risk, unloading, customs, documentation, and insurance.
Practical next steps before signing
– Obtain cost estimates from freight forwarders and customs brokers for the named port (unloading, duties, handling).
– Insert simple, specific contract language mirroring the checklist above.
– If in doubt, switch to a modern Incoterm and cite the edition (e.g., “DAP [named place], Incoterms 2020”) so both parties reference the same standardized rules.
– If customs or regulatory obligations are material, seek legal or trade-compliance advice.
Sources for further reference
– International Chamber of Commerce (ICC) — Incoterms rules: https://iccwbo.org/resources-for-business/incoterms-r
erms-rules/
Other reputable references
– Investopedia — DES definition and history: https://www.investopedia.com/terms/d/des.asp
– World Customs Organization (WCO) — guidance on customs procedures and classification: https://www.wcoomd.org
– UN Conference on Trade and Development (UNCTAD) — transport, trade facilitation and logistics resources: https://unctad.org/topic/transport-and-trade-logistics
– U.S. Customs and Border Protection — importing basics (example national customs authority guidance): https://www.cbp.gov/trade/basic-import-export
Final practical note
– DES is largely superseded by modern Incoterms that provide clearer allocation of costs, risk, delivery points, and documentation. For new contracts prefer a current Incoterm (cite edition) or, if using DES-like wording, write explicit clauses for delivery point, risk transfer, unloading, customs responsibility, and required documents. When material obligations (duties, compliance, insurance) are involved, consult a trade lawyer, freight forwarder, or customs broker before signing.
Educational disclaimer
This reply is for general educational purposes and does not constitute legal, tax, or individualized commercial advice. Consult qualified professionals for contract drafting, legal interpretation, or compliance decisions.