Course Name: Assignment (15%)
Individual Assignment (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. Submit your completed assignment
before the end of Module 6.
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?
a. true
b. 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):
a. The freight costs must be prepaid up to the port of
arrival
b. The seller must arrange and pay for marine insurance
c. It is a marine bulk shipment
d. The seller must arrange and pay for any
documentation or export declaration formalities in the
country of origin
e. 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?
a. Yes
b. No
c. Sometimes
d. 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.”
a. where the costs divide
b. where the risks transfer
c. both places
d. in this case, no named place is required
Compare and contrast the following two terms: (2
marks each)
CPTCIF
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?
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