What is shipped (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 fulfilled his obligation upon delivery of goods not released through customs at a designated port. It assumed all the costs and risks inherent in the delivery of the goods at this stage, at which time they were available to the buyer and the buyer assumed all the costs and risks resulting therefrom.
This term applied to both inland and maritime shipping and often to charter shipping. It expired as of 2020. DES is a legal term, and the exact definition may differ somewhat by country.
Delivered off-ship (DES) explained
Contracts involving international transport often contain abbreviated commercial terms which describe details such as time and place of delivery, payment, when the risk of loss passes from seller to buyer, and who pays the costs transport and insurance. DES was just one type of international commercial contract of this type.
Key points to remember
- 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 which applied to both inland and maritime navigation and often to charter navigation. It expired in 2020.
- DES is a legal term, and the exact definition may differ somewhat by country.
Incoterms define shipping conditions
The most well-known trade terms are called “incoterms”, short for “international trade terms”. The International Chamber of Commerce (ICC), an organization, publishes them for the purpose of promoting international trade and commerce. ICC encourages and protects open markets for goods and services.
Incoterms are often identical in form to national terms such as the American Uniform Commercial Code (UCC), but have different meanings. The parties to a contract must therefore expressly state the applicable law of their conditions.
As a general rule, the seller remains responsible for the products until delivery. It bears the costs and risks linked to the transport of goods to the port. The seller is fully responsible for shipping and must pay the shipping company and purchase insurance for the goods.
The seller’s obligation ends when he delivers the goods to the agreed port on board the ship, not yet cleared for import. Buyers are responsible for all costs associated with receiving and unloading goods and clearing 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 the legal obligation to deliver the goods to the port and to ensure their arrival on site, but not on a quay.
Delivered Ex Quay specifies that the seller must send the goods to the quay at the port of destination. Delivered Ex Quay may record a duty as paid or unpaid. The seller is obliged to cover costs, such as duties, if he pays and is responsible for the supply of the goods. In the event of non-payment, these obligations and responsibilities lie with the buyer.
The seller must make the goods available at his workplace at Ex Works. All transport costs and risks are borne by the buyer from there.
Concrete examples of deliveries on board
Seller X ships the contracted goods to a jetty and a port in Kennebunkport, Maine. Halfway through, the ship encounters a sinking storm. Seller X absorbs the loss because the shipment has not yet arrived at the port.
Alternatively, seller X’s shipment arrives safely at Kennebunkport. The storm hits while the ship is moored after the time when buyer Y contractually took possession of the products. The ship sinks in the harbor. Buyer Y absorbs the loss because he has accepted delivery, even if the goods have not yet left the ship.