Global Logistics

Module 5: Individual Assignment Incoterms

In this individual assignment, you will apply concepts learned in this module (CIFFA etextbook, CIFFA elearning, Lesson: Module 5) around Terms of Trade / Incoterms^® 2020. Work out the assignment prior to beginning the quiz

Course Code:	INTL704
Course Name:	Global Logistics

 

Module 5: Individual Assignment Incoterms^® (15%)

 

In this individual assignment, you will apply concepts learned in this module (CIFFA etextbook, CIFFA elearning, Lesson: Module 5) around Terms of Trade / Incoterms^® 2020. Work out the assignment prior to beginning the quiz.

 

You are asked to manage the following two shipments of intermodal cargo going by TEU (sea) or ULD (air).

	SHIPMENT A	SHIPMENT B
Origin: Shipper’s Plant	Budd’s BMW Canada, Oakville, ON, CA	VW, Taubaté, Brazil
Terminal & customs	Schenker Whse, Montreal, Quebec	Sao Paulo International Airport
Port – seller’s side	Port of Halifax, NS	Port of Santos, Brazil
Port – buyer’s side	Port of Antwerp, Belgium	Port of Miami, Florida
Terminal & customs	Schenker Whse, Munich, Germany	YYZ, Toronto
Destination: Buyer’s Warehouse	BMW, Munich, Germany	VW, 550 Adelaide St E., Toronto, Canada,

 

Use Shipments A and B (above) to completely label the diagram with locations of delivery and shade the seller’s obligations for the following containerized shipments:

 

1. (1 mark) Shipment B – Incoterm^® is EXW

 

					||
Cost	Transportation
	Insurance
Risk of ownership
			pre-carriage		main carriage	on-carriage

 

 

 

2. (1 mark) What is the complete Incoterm^®?

 

 

3. (1 mark) Shipment A – Incoterm^® is CPT

 

					||
Cost	Transportation
	Insurance
Risk of ownership
			pre-carriage		main carriage	on-carriage

 

 

4. (1 mark) What is the complete Incoterm^®?

 

 

5. (1 mark) Shipment B – Incoterm^® is CIF port

 

					||
Cost	Transportation
	Insurance
Risk of ownership
			pre-carriage		main carriage	on-carriage

6. (1 mark) What is the complete Incoterm^®?

 

 

7. (1 mark) Shipment A – Incoterm® is DPU port

 

					||
Cost	Transportation
	Insurance
Risk of ownership
			pre-carriage		main carriage	on-carriage

 

8. (1 mark) What is the complete Incoterm^®?

 

 

 

9. (1 mark) DAP is best for a contract in which the buyer is a large international company?
10. true
11. false

 

10. (1 mark) Why? Or Why not? Justify your choice for question 9.

 

11. (1 mark) What potential problem is there with EXW that makes FCA a better selection in most cases?

 

 

12. (1 mark) Using FOB “named port” in your Sales Contract shows interested parties that (select all that apply):
13. The freight costs must be prepaid up to the port of arrival
14. The seller must arrange and pay for marine insurance
15. It is a marine bulk shipment
16. The seller must arrange and pay for any documentation or export declaration formalities in the country of origin
17. The seller must arrange and pay for main-carriage

 

13. (1 mark) I am responsible for paying all the bills at my company. I notice that we, the buyers, have received a shipment for which the bill of lading says, “freight prepaid”. Am I correct that we will be receiving an invoice from a carrier or freight forwarder for the freight charges for this shipment?
14. Yes
15. No
16. Sometimes
17. I need more information

 

14. (1 mark) List the Incoterm(s) ® acronyms used for shipments in which the truck bill of lading delivering the product to final destination is for the seller’s account.

 

 

 

15. (1 mark) List all the Incoterms® in which responsibility for costs and risks are divided at two different places:

 

 

16. (1 mark) Incoterms® 2020 made a clarification about where delivery takes place. For the terms in “D.” above, which “place” is where the seller is considered to have completed “delivery.”
17. where the costs divide
18. where the risks transfer
19. both places
20. in this case, no named place is required

 

 

 

Compare and contrast the following two terms:  (2 marks each)

	CPT	CIF
17. Mode(s) of transportation
18. Place of division of cost obligations
19. Place of transfer of responsibility for risk of loss
20. Insurance requirements

 

21. (2 marks) Sammy is a freight forwarder arranging shipping of goods via air from Place A to Place B. It is agreed that the Seller will arrange pre-carriage and deliver the goods to Sammy’s warehouse. The rest of the costs and risks are for Sammy’s customer, the Buyer. What is the FULL Incoterm®?

 

 

 

Excellent Exporters, in Brampton, Ontario sells products to Toys R US in Tehran, Iran under a clean, onboard bill of lading.

Terms of sale: CPT, Designated Port, Incoterms^® 2020

Cargo: 22 wooden pallets of toys loaded in one 20-ft ocean container

Terms of delivery: consolidated container, ocean freight

Terms of payment: open account, net 60 days

 

22. (1 mark) Who selects the freight forwarder and pays the ocean freight charges?

Buyer 􀂈 Seller 􀂈

23. (1 mark) The place where the risk transfers from the seller to the buyer is the “Designated Port”

True 􀂈 False 􀂈

 

24. (1 mark) There are goods of U.S. origin in the consignment and a general export permit is required. However, this GEP 12 was not entered on the export declaration (CAED). Who is responsible for paying the administrative penalty to the CBSA?

Buyer 􀂈 Seller 􀂈

 

25. (1 mark) The shipment was delayed at the arrival port due to customs clearance problems. Storage charges were US $600.00. Who is responsible to pay for the storage?

Buyer 􀂈 Seller 􀂈

26. (1 mark) When the container was unloaded at the consignee’s door, the contents of eight pallets were damaged. Who bears the loss?

Buyer 􀂈 Seller 􀂈

27. (1 mark) What would be your recommendation about Incoterm® named place in this problem?

You are shipping 5 skids of sulfuric acid from a “Montreal Manufacturer”, sold FCA Montreal Incoterms^® 2020. This is an incorrect use of Incoterms^® because a specific named location is not given. After the sulfuric acid was loaded into the Cartage company truck, at the plant, the driver on the way to the export terminal in Montreal has an accident on the expressway. His truck “jackknifes”, tips, and crashes against the steel guardrail, busting the trailer doors open and spilling sulfuric acid cans all over the highway, closing it for hours in both directions.

 

This leaves us with two possible situations:

28. (2 marks) Situation #1: If the buyer’s “nominated carrier” was moving the sulfuric acid to the export terminal Montreal, then the buyer bears the risk. Please note that “nominated carrier” may also mean “local forwarder”, or “forwarder’s agent overseas giving instructions to their local agent” to collect the freight. A proper description of the Incoterm® for this case would be:Full Incoterm^®:

 

 

 

 

 

 

 

 

 

29. (2 marks) Situation #2: The seller decides to use their own in-house trucks to deliver the cargo to the export terminal. The only information provided to the seller are the booking details for the move. In this situation the seller has yet to deliver the goods in accordance with the Incoterm® used. Thus, the seller has the risk of loss. The proper Incoterm® for this situation would be

 

Full Incoterm®:

 

 

You are employed by YYJ Exports, Victoria, BC. Your company wants to export electrical supplies to Hotwire Electrical Inc. in Tokyo, Japan. Shipping instructions are as follows:

The goods are to be shipped from YYJ Exports by PRO NORTH Trucking (175 Apple Ave., Victoria, B.C.) by truck on the ferry to Vancouver Airport and loaded onto a JL flight to Tokyo

From Tokyo Airport’s Freight Terminal NIPPON Trucking will deliver the goods to Hotwire Electrical Inc. Main Warehouse, 123 ABC Street, Tokyo, Japan.

The buyer has asked that you quote prices under various alternatives. What complete Incoterms^® would apply for the following scenarios?

 

30. (2 marks) The buyer wants the goods delivered, insured, to Tokyo Terminal, but they are willing to assume risk for the goods once they are given to Pro North Trucking in Victoria.

 

31. (2 marks) The buyer wants you to deliver the goods to the Freight Terminal HND Tokyo Airport. The buyer will make their own insurance arrangements, and is willing to assume risk for the goods once they are loaded on to PRO NORTH Trucking’s trailer.

 

 

32. (2 marks) The buyer wants you to deliver the goods packed and loaded to PRO NORTH Trucking at your plant in Victoria. The buyer will accept the risk and cost for the goods once they are in the possession of PRO NORTH Trucking and will make all the necessary arrangements to bring them to Osaka.

 

33. (2 marks) The buyer wants you to deliver the goods to JL at the Freight Terminal, Vancouver International where they will accept the risk and cost for the goods and make the necessary arrangements to transport the goods to Tokyo and beyond.

 

 

 

34. (2 marks) The buyer wants you to deliver the goods to their agent, Schenker Logistics, Tokyo Airport where they will assume risk for the goods, account for them to customs, and pay duties and taxes and handle the final delivery.

 

 

 

 

35. (2 marks) Compare and contrast the insurance rules from Incoterms® 2010 to Incoterms® 2020.

 

 

 

36. (2 marks) Given that the Incoterm® used in a contract is CIF (port of arrival), what advice would you, as a freight forwarder, give your client, the consignee with respect to insurance?