What is a Delivery Term Code in Foreign Military Sales?

The point of delivery is where responsibility for the physical movement of an FMS shipment passes from the DoW to the purchaser. The point of delivery is identified on the LOA by the delivery term code (DTC). The CONUS point of delivery is generally a commercial airport or seaport and it can also be the freight forwarder’s facility. However, there are numerous situations when the point of delivery may be at a CONUS military POE on board the purchaser’s carrier or at an overseas POD or final destination.

The DTC indicates the point in the transportation cycle where responsibility for the physical movement of an FMS shipment passes from the U.S. DoW to the purchaser. The LOA normally specifies a delivery location for every line included in the case. The DTC specifies to what point the U.S. will provide transportation, and, from that point onward, the purchaser provides the transportation. DTC 5 indicates that the USG will sponsor transportation to the CONUS port of embarkation. This is normally the freight forwarder. DTC 8 indicates pickup of items by DTS at the point of origin and movement to a DoW-controlled CONUS port, where the materiel is loaded aboard the purchaser’s own ship or aircraft.

There are three major elements involved in the delivery of SC materiel to the proper purchasing country address. These elements are the FMS LOA, the MILSTRIP requisition, and the MAPAD system.

During the pre-LOR planning and processing of the LOA, various transportation blocks are completed, which identify how items will be shipped, when shipments will be released, where responsibility for physical movement of an FMS shipment passes to the purchaser, and which accessorial charges are applicable. The LOA serves as the authority to export. It is necessary, therefore, that the freight forwarder has a copy of the LOA and all applicable amendments and modifications to the LOA to facilitate shipments to the customer’s country. The purchaser should provide the LOA and any amendments or modifications to the freight forwarder.

The second major element in the delivery of FMS materiel and related documentation is the MILSTRIP requisition. Once an FMS case has been established and funded, applicable transportation/supply codes are copied from the LOA into supply requisitions. For example, the offer/release code, DTC, mark-for code, and freight forwarder code are embedded in requisitions to describe shipping information.

When FMS customers use the DTS, a DTC percentage is applied to the line to compute an estimated amount for these costs on the LOA. DTC percentages are based on the transportation provided (e.g., port-to-port or depot-to-in-country destination) and the rate area where articles are being delivered.

There are several methods of computing the cost of transportation based on the source of the materiel. Transportation costs may be included on the LOA line price of the materiel being shipped, or it may be collected as a separate transportation line on the LOA, or it may be computed as a percentage based on the item value and the DTC. For major systems and components, transportation costs may be computed from estimated actual shipping costs identified in SAMM Appendix 2, “Transportation Cost Lookup Table.” For materiel returns and repairs, actual transportation costs may be assessed against the LOA.

For FMS freight shipped surface via the DTS with door-to-door delivery terms (DTC 7), the DoW is responsible for transportation, including trans-ocean and overseas inland movement from the point of origin to a specified inland location. The customer is responsible for unloading the shipment from the inland carrier at the specified location and for all subsequent onward movement. Any expenses the DoW incurs in the movement of FMS materiel must be charged to the FMS purchaser through the LOA.