12 Incoterms Exercise.docx

UEF Kuopio Language Centre

ECB

Spring 2016

INCOTERMS EXERCISE Here is an alphabetical list of the 11 Incoterms based on the International Chamber of Commerce Guide to Incoterms® 2010, published on the International Chamber of Commerce (ICC) website (www.iccwbo.org) CFR COST AND FREIGHT (…named port of destination) CIF COST, INSURANCE AND FREIGHT (…named port of destination) CIP CARRIAGE AND INSURANCE PAID TO (…named place of destination) CPT CARRIAGE PAID TO (…named place of destination) DAP DELIVERED AT PLACE (…named place of destination) DAT DELIVERED AT TERMINAL (…named terminal at port or place of destination) DDP DELIVERED DUTY PAID (…named place of destination) EXW EX WORKS (…named place) FAS FREE ALONGSIDE SHIP (…named port of shipment) FCA FREE CARRIER (…named place) FOB FREE ON BOARD (…named port of shipment) 1.

Match the correct Incoterm with the brief description opposite

1. _________________ = The seller makes the goods available at their own premises, but is not responsible for loading unless otherwise agreed 2. _________________ = The seller delivers the cleared goods into the charge of the carrier named by the buyer at the named place. 3. _________________ = The seller delivers the cleared goods to the quay alongside the vessel at the named port and clears the goods for export 4. _________________ = The seller delivers the cleared goods to the quay alongside the vessel at the named port, clears the goods for export and organizes the loading of the goods onto the ship. 5. _________________ = The seller pays for carriage to the named destination but the risk and any additional costs are transferred to the buyer. 6. ________________ = The seller pays the costs and freight charges for delivery of the goods to the named port and clears the goods for export but the buyer bears the risks after shipment. 7. _________________ = The seller pays for carriage to the named destination and also for insurance (minimum coverage only required) 8. ________________ = The seller pays the costs and freight charges for delivery of the goods to the named port but also clears the goods for export and contracts for insurance (min. coverage only required).

2 9. _________________ = The seller pays for carriage to the named place. The goods are ready for unloading but not cleared for import. Buyer is responsible for unloading. 10. _______________ = The seller pays for carriage to the named terminal and the goods are unloaded but not cleared for import. 11. _______________ = The seller delivers the goods to the country of importation and makes them available at the named place (paying both export and import clearance, bearing all risks, duties and costs).

2.

Which term involves the highest risk to the seller?

________________

3.

Which term involves the highest risk to the buyer?

________________

4.

Under which terms must the seller deliver the goods to a carrier appointed by the buyer? (3)

________________ ________________ ________________

5.

Which terms only apply to sea freight or inland waterway freight? (4)

__________

_________

_________

_________

Questions for discussion in class 1) Which terms should importers avoid and why? 2) Which terms should exporters avoid and why? 3) What in the international trading situation do Incoterms cover? 4) What do they not cover, and so needs to be negotiated separately?