What it means
DAF was one of the delivery terms published by the International Chamber of Commerce, the body that maintains the Incoterms rules used in cross-border sales contracts. The seller had to place the goods at the buyer's disposal at a named frontier point, cleared for export but not cleared for import, ready for unloading from the arriving transport.
Everything past that line on the map, meaning import formalities, duties and onward carriage, belonged to the buyer. The point where responsibility changes hands is also the point where cost and risk change hands, so a delivery term quietly decides who pays for what.
Two suppliers quoting what looks like the same number can be offering very different deals if one is selling on DAF terms and the other is delivering to your warehouse. In accounting terms, the delivery point usually drives when the seller recognises revenue and when the buyer takes the goods into inventory.
If a consignment sits at the frontier over a month end, the DAF term tells both finance teams whose books it belongs in. DAF was written for land borders, which is why it disappeared when the 2010 revision consolidated the delivered terms into a smaller set.
If you inherit a contract that still says DAF, read it as delivery to a named border point and check the wording on unloading, because the old rule left unloading to the buyer. Buyers should price the frontier handover honestly rather than treating the DAF figure as the landed cost.
Import duty, brokerage, onward freight and any waiting time at the crossing all sit on the buyer's side and can add several % to the effective unit price.
In practice
Real-world examples.
Example
A Polish food processor buys grain from a Ukrainian supplier on DAF terms at a rail border crossing. The seller pays for rail haulage and export paperwork up to the frontier, and the processor arranges import clearance, duty and the onward run to its mill. When a wagon is delayed on the far side of the border, the loss still sits with the seller because risk has not yet passed.
Example
A construction firm renews a five-year steel supply agreement that was originally drafted in 2007 and still uses DAF wording. Its finance director asks legal to add a clause confirming who unloads at the border, because the newer Incoterms rules treat that question differently. The clarification avoids a repeat of a dispute over crane hire the previous year.
Example
A distributor comparing two quotes finds one at $92 per unit DAF at a border post and one at $101 per unit delivered to its warehouse. After adding duty, brokerage and 400 kilometres of inland freight to the first quote, the DAF option works out at $103 per unit. The apparently cheaper supplier is actually the more expensive one.
Formula
Calculation
Buyer's landed cost = DAF price + import duty + customs brokerage + onward inland freight + insurance from the frontier
Worked example. A machinery distributor buys 600 industrial pumps on DAF terms at a road border crossing for $180,000, which is $180,000 / 600 = $300.00 per pump. Import duty is charged at 6% of the DAF value, so duty is $180,000 x 0.06 = $10,800. Brokerage to clear the goods costs $1,200, onward inland freight to the buyer's depot costs $4,500 and insurance for that final leg costs $900.
Landed cost = $180,000 + $10,800 + $1,200 + $4,500 + $900 = $197,400.
Spread across 600 pumps that is $197,400 / 600 = $329.00 per pump. The delivery term therefore adds $29.00 per pump, or just under 10%, to the price the buyer actually carries into inventory.Case study
Seen in the real world.
This is an illustrative, fictional example. Northvale Components, an invented parts importer, agreed a two-year contract on DAF terms at a mountain border crossing because the headline price was 7% below the nearest alternative. The buying team compared quotes on the invoice line alone and never built a landed cost model.
In the first winter, clearance queues at the crossing ran to three days, and Northvale paid demurrage on the trucks waiting on its side of the frontier. Once duty, brokerage, waiting time and the extra 300 kilometres of inland haulage were added, the real unit cost sat 4% above the alternative supplier's delivered price.
The finance team rebuilt the tender template so that every quotation had to be restated as a landed cost before comparison. On the next renewal, Northvale moved the contract to a delivered-to-warehouse basis and stopped paying for a border it never wanted to manage.
Watch out
Common mistakes.
- Treating the DAF price as the landed cost. It excludes import duty, clearance fees and all onward transport, which the buyer pays separately.
- Assuming the seller unloads the goods at the frontier. Under DAF the goods are placed at the buyer's disposal on the arriving vehicle, and unloading is the buyer's responsibility unless the contract says otherwise.
- Using DAF in a new contract. It was withdrawn from the Incoterms rules in 2010, so a fresh agreement should use a current term and name the exact delivery point.
Questions
People also ask.
Is DAF still valid if it is written into an existing contract?
Yes, because the parties are free to agree any terms they wish, but the contract should spell out the named point and the unloading arrangement rather than relying on a withdrawn rule.
Which modern term replaced DAF?
Delivered At Place is the closest equivalent, since it also has the seller deliver to a named point without clearing the goods for import.
Does DAF work for sea shipments?
It was designed for land frontiers reached by road or rail, so it fits poorly with container shipping and a port-based or place-based term is a better choice.
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