Delivered Ex Ship (DES) is an international trade term that once shaped how Australian businesses imported goods—especially bulk commodities and large-scale machinery. While DES was officially replaced by Delivered at Place (DAP) in the 2010 Incoterms update, its legacy continues to influence contract negotiations, risk allocation, and logistics strategies in 2025. As global supply chains face ongoing disruptions and regulatory changes, understanding DES remains crucial for importers, exporters, and finance professionals across Australia.
What Is Delivered Ex Ship (DES)?
Delivered Ex Ship (DES) was a key Incoterm used in international contracts, obligating the seller to deliver goods to a named port aboard a vessel—ready for unloading, but before customs clearance. In DES arrangements, the seller bears all risks and costs up until the goods arrive, still onboard, at the destination port. The buyer then takes over responsibility for unloading, import duties, and onward transport.
- Seller’s responsibility: Deliver goods onboard ship at the agreed port of arrival
- Buyer’s responsibility: Unloading, customs clearance, import taxes, and inland transport
- Key point: Risk transfers from seller to buyer once the goods are available for unloading
While DES isn’t used in new contracts after 2010, legacy agreements and industry practice mean it still appears in some documentation, especially for bulk shipments to Australian ports like Fremantle, Sydney, or Melbourne.
DES in 2025: Why Does It Still Matter?
Despite being replaced by DAP, DES continues to surface in Australia’s resource, energy, and agribusiness sectors. Here’s why it matters in 2025:
- Legacy contracts: Many long-term supply agreements for commodities (iron ore, coal, wheat) still reference DES, especially those signed before 2010.
- Dispute resolution: If a shipment’s delivery terms are unclear or based on outdated documents, knowledge of DES can clarify risk and cost allocation in legal disputes.
- Customs and compliance: Australian Border Force and port authorities may encounter DES references during inspections or audits, requiring importers to demonstrate their responsibilities.
Additionally, the Australian government’s 2025 digital trade facilitation agenda is driving the standardisation of trade documentation. Understanding DES helps businesses transition smoothly to current Incoterms and avoid costly errors in customs declarations or insurance arrangements.
Financial Implications for Australian Businesses
DES terms have a direct impact on the financial and operational aspects of an import transaction. Here’s how:
- Cost control: Under DES, importers must budget for stevedoring (unloading), port charges, customs fees, and inland transport—all of which can fluctuate with Australia’s evolving port infrastructure and biosecurity regulations in 2025.
- Risk management: With risk transferring at the ship’s rail, buyers need robust insurance coverage for the unloading phase, especially with recent increases in extreme weather events impacting ports.
- Cash flow: DES can affect the timing of payment obligations, as goods are not considered delivered until arrival. This can influence trade finance arrangements, such as letters of credit with Australian banks.
Example: An Australian mining company importing heavy machinery from Germany under a legacy DES contract must cover all costs and risks once the vessel docks in Port Hedland, including any delays in unloading due to industrial action or weather. These financial exposures highlight the importance of updating contracts to modern Incoterms where possible.
Transitioning from DES to DAP: What to Watch For
Most new contracts now use DAP, which simplifies risk allocation by transferring responsibility when goods are made available at a named place, not just at the ship. For businesses still dealing with DES, here’s how to future-proof your operations:
- Review old contracts: Audit existing agreements for DES references and renegotiate terms to align with 2025 standards.
- Update documentation: Work with freight forwarders, customs brokers, and insurers to ensure all paperwork reflects current Incoterms.
- Educate teams: Train procurement and logistics staff on the key differences between DES and DAP to avoid miscommunication with overseas suppliers.
The Australian Trade and Investment Commission now provides updated resources and digital tools to help importers modernise contracts and improve compliance—a crucial step for risk management and cost efficiency in the current regulatory environment.
Conclusion
While Delivered Ex Ship (DES) may be a legacy term, its influence lingers in Australia’s import sector. Understanding DES is vital for navigating old contracts, managing financial risk, and ensuring compliance in 2025. Take proactive steps to review your trade agreements, update your processes, and stay ahead in the evolving world of international logistics.
