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Description

Incoterm Basic
Scenario
DECLARATION OF ACADEMIC INTEGRITY
Form Title
Department
Form Code
Issue Date
Declaration of Academic Integrity
Academic Departments
IMCO/QMS/AD/FORM
17/01/2016
Assignment 1
Please sign to confirm that you have read and accepted the following statements. Your assessment will
not be accepted without this signed declaration.
1. I confirm that I have read and fully understood IMCO’s policy on Academic Integrity, including
practices that may lead to committing plagiarism and which I must avoid.
2. I confirm that in the attached assessment I have not presented or attempted to present anyone else’s
work as my own, except where I have indicated. I confirm that I understand that doing so would mean I
had committed plagiarism.
3. I confirm that I understand that, if I fail to comply with IMCO’s policy on Academic Integrity, IMCO
will impose penalties which may in the most serious of cases result in termination of my studies at IMCO.
I confirm that I understand that if I am judged guilty of plagiarism, I will receive a score of zero and the
other penalties indicated under IMCO’s policy on Academic Integrity in the Student’s Handbook will
apply.
4. I agree to IMCO submitting my work to Turn-it-in or using any other source to verify whether my
work contains plagiarized material.
The extent to which I have worked with others is as follows:
Programme: ………………………………………………………….
Module Code: …………………………………………………………….
Module Title: …………………………………………………………
Name: …………………………………………………………………
IMCO student ID number: …………………………….
Class: …………………………………………………….
Signature ………………………………………………..
Date: …………………
See the Student Handbook for IMCO’s policy on Academic Integrity and Plagiarism before you sign.
Assignment 1
Learning Outcomes
Upon completing this task, students should be able to
•Analyze the information which has learnt from different sources.
•Develop analytical thinking and problem-solving skills and a decision making.
•Develop teamwork skills.
Learning Opportunities: Teamwork, Critical evaluation of given terms. Writing skills. Ability to
comprehend the scenario and apply it to other businesses and sector.
Deadline: 25/3/2021
Total Marks: 20
Instructions:
Based on the case below use the INCOTERMS which has been discussed in the incoterm’s
scenario, in this case, you work at a fish exporting company in Barka, Oman. You have received
a request for a quotation for supplying an importer in Surat, India with frozen kingfish. The
kingfish will be loaded in 100 Boxes and transported in 40’ft reefer container.
PART A: UNDERSTANDING QUESTIONS
Summarize the answer to the following questions by the written short report (100 words for each
condition):
1. Identify your role in this case.(in general)
2. Draft the costs that should be in the commercial invoice based on the (DAP Surat, FCA
Port of Suhar, FOB Barka, CIF Surat)
– Explain what does the seller need to do to get paid for his goods?
– Explain what does the buyer need to do to get the goods?
– Allocate which point will the seller carry the (transporting) costs?
– Allocate which point will the seller bear the risk and cost for damage?
3. Who will take the risk and pay if damages occur for (DAP Surat, FCA Barka, FOB port
of Suhar, CIF Surat)?
4. Identify Who arranges transport and who pays for (DAP Surat, FCA Barka, FOB port of
Suhar, CIF Surat)?
5. Identify Who arranges the insurance and who pays for (DAP Surat, FCA Barka, FOB
port of Suhar, CIF Surat)?
6. Identify Who arranges the packaging and the stuffing of the container for (DAP Surat,
FCA Barka, FOB port of Suhar, CIF Surat)?
7. Identify Who will take care of the documentation for (DAP Surat, FCA Barka, FOB port
of Suhar, CIF Surat)?
PART B: APPLY AND ANALYZE QUESTIONS
8. Design a document flow for (DAP Surat, FCA Barka, FOB port of Suhar, CIF Surat) job
for the client.
9. Complete the table below based on the information requested. (Seller, Buyer)
INCOTERMS
Loading on
Truck
(carrier)
Exportcustoms
deceleration
Carriage
to port
of
export
Unlading
of truck
in port of
export
Loading
charges
in port
of
export
Carriage
to port
of
import
Unlading
charges
in port of
import
Loading
on truck
in port
of
import
Carriage
to place of
destination
insurance
Import
customs
clearance
FCA
FOB
CIF
DAP
PART C: EVALUATE QUESTION
10. Evaluate each incoterm through its advantages and disadvantages.
11. Recommend to your customer which one of the incoterms are better to use in this case.
Import
taxes
Unlading
destination
The end
(INCOTERMS Scenario Part 2)
Learning Outcomes: by the end of the lesson, students will be able to
• Express why the INCOTERMS are so important.
• Explain why the freight forwarder should know abou
the Incoterms.
• Classify the INCOTERMS according to INCOTERMS
clause.
• Discuss the overview of the scenario.
1. What is the meaning of the INCOTERMS?
☺Incoterms are trade terms published by the International
Chamber of Commerce (ICC) that are commonly used in
both international and domestic trade contracts.
☺Thirteen terms of sale accepted worldwide in assignment of
costs and responsibilities between the buyer and the seller.
(Incoterms – IAS Paper,2020).
2. Why the INCOTERMS are so
important
❖ To define the obligation and responsibilities of the seller and the
buyer in the commercial transaction in the delivery of the goods.
❖ To determine the bearing of risks and costs between the seller and
buyer as well as the customs responsibilities.
❖ INCOTERMS Provide rules and guidance to importers, exporters,
lawyers, transporters, insurers and students of international trade.
(Incoterms – IAS Paper,2020).
3. Classify the INCOTERMS according to
INCOTERMS clause
E
terms
(EXW):
(Incoterms – IAS Paper,2021).
F terms (FCA,
FOB, FAS)
C terms (CFR,
CIF,
CPT,
CIP):
D terms (DAT,
DAU, DDP):
4. why the freight forwarder should know
about the incoterms
❑To reduce risk because the countries have different
business cultures and languages.
❑it’s wise to have a clearly-written contract to reduce
any misunderstandings.
❑By specifying the seller’s and buyer’s obligations,
there is no confusion with regards to rules of
transportation from point A to point B.
(Incoterms – IAS Paper,2020).
INCOTERMS Overview
Port of Aqba
Seller
Netherlands
Insurance
(Incoterms – IAS Paper,2021).
Forwarder
Port of
Rotterdam
Jordan
Scenario Overview
Seller
Exco Trading BV.
Customs Broker
Real Player
FORWARDERS
SVW Custom Support
Trucking Company
In Netherlands
Trucking Companies:
CFDDS Apeldoorn
Kharoof Multimodal
Ships Agent
Insurance Company
In Jordan
Lloydhaven Ships Agency
Bloemers Nassau Insurance
Co.
Freight Service Rotterdam
Fast Logistics Apeldoorn
Rhenania Kleve
Cetin Nijmegen
C & M Utrecht
IDC Amsterdam & Dochters
Boogaard Rotterdam BV
Tilmann Breda
Den Beijer Venlo
Den Haag Transport Agentcy
Gebr.Poppe Roosendal
GTL Gering Dordrecht
Nettetal Logistics GmbH
Eindhoven Transport & Logistics
Inter Freight Lelystad
Rijswijk Forwarding
Station
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Documents of the Scenario
Request(s) for
Quotation
Offer
Order
DOCUMENT FLOW
Seller
Forwarder
Customs
broker
Trucking
company
Ships agent
Insurance
company
Trucking
company
1
RFQ s
(4 X)
RFQ
Offer
RFQ
Offer
RFQ
Offer
RFQ
Offer
RFQ
Offer
Offers
(4 X)
Orders
(4 X)
Scenario Overview
(FCA) Free
carrier
warehouse
(Amersfoort)
(FOB) : Free on
Board (Port of
Rotterdam)
(CIF) :Cost,
Insurance &
Fright (Aqba
Port)
(DAP):
Delivered at
Place (Amman)
INCOTERMS are
used to divide
transaction costs
and
responsibilities
between the seller
and Buyer.
Take into account the following costs:
1. Packaging
2. Stuffing of container
3. Inland Transport
4. Export Customs Clearance
5. THC Lading
6. Sea Freight
7. THC Discharge
8. Inland transport to destination
9. Stripping
10. Insurance
11. Customs Duties
INCOTERMS,2020
FCA : Free carrier warehouse (Amersfoort)
• Seller arranges pre-carriage from seller’s depot to the named place, which can be a
terminal or transport hub, forwarder’s warehouse etc.
• Delivery and transfer of risk takes place when the truck or other vehicle arrives at
this place, ready for unloading – in other words, the carrier is responsible for
unloading the goods.
• seller is responsible for loading the goods onto the truck etc.
• the seller is responsible for export clearance; the buyer assumes all risks and costs
after the goods have been delivered at the named place.
In the scenario
(FCA) Free carrier warehouse (Amersfoort)
• Seller will load the cargo in the container at Amersfoort.
• the seller EXCO trading BV will send the RFQ to the forwarder to ask him about
the price how much will he pay to transport cargo.
• The forwarder will contact the customs clearance to check on the cargo if its
prohibitions or not.
•
• The forwarder will forward the RFQ to the Customs broker
• Customs broker 1.1 SVW Custom Support.
FCA: Free Carrier
1. Any mode of transport
2. Parties need to name the place of the delivery as precise as possible.
3. The seller is obliged to organize export clearance.
4. No obligation on the seller on the procure insurance.
5. No Obligation on the seller to provide transport document but seller must help the
buyer to obtain transport document.
6. Transfer of the risk takes place when goods are the disposal of the buyer, which is when
goods are loaded on the first carrier or at a different agreed named.
Warehouse/
Amersfoort
Trucking
Company
 FCA : Free carrier warehouse (Amersfoort)
Loading the cargo on the truck at
the seller’s premises /Amersfoort
Warehouse/ Amersfoort
Trucking Company
Seller’s Services
Customs broker
FOB : Free on Board (Port of Rotterdam)
• Seller delivers goods, cleared for export, loaded on board the vessel at the named
port.
• Once the goods have been loaded on board, risk transfers to the buyer, who
bears all costs thereafter.
In the scenario
(FOB) Free on Board (Port of Rotterdam)
• Seller will load the cargo on board the vessel at the Rotterdam port
• The seller will send the RFQ to the forwarder to ask him about the price how
much will he pay to transport cargo.
• The forwarder will forward the RFQ to the Customs broker SVW Custom
Support
• The Forwarder will request from trucking company to bring the cargo at the
port of Rotterdam for loading on the ship. He will forward the RFQ to the
trucking company CFDDS Apeldoorn (Netherland)
FOB: Free On Board
Sea or Inland waterway
Parties need to identify the loading port. If no specific loading point is indicated, then seller
may select may point within the named port that best suits its purpose.
The seller is obliged to organize export clearance.
The seller delivers the goods on the board of the ship nominated by the buyer
No Obligation on the seller to procure insurance.
Warehouse/
Amersfoort
Port of loading/
Rotterdam port
Trucking
Company
 FOB : Free on Board (Port of Rotterdam)
loading the cargo on board
the vessel at the Rotterdam
port
Warehouse/
Amersfoort
Port of loading/
Rotterdam port
Trucking
Company
Seller’s
Services
Customs
broker
Trucking
Company
CIF : Cost, Insuarnce & Freight (Aqba Port)
• Seller arranges and pays for transport to named port. Seller delivers goods,
cleared for export, loaded on board the vessel.
• However, risk transfers from seller to buyer once the goods have been loaded on
board, i.e. before the main carriage takes place.
• Seller also arranges and pays for insurance for the goods for carriage to the
named port.
In the scenario
• (CIF) Cost, Insurance & Fright (Aqba Port)
• Seller will load the cargo on board the vessel and transferred to the Aqba port.
• First, the seller will send the RFQ to the forwarder to ask him about the price how much will he pay
to transport cargo.
• The forwarder will forward the RFQ to the Customs broker SVW Custom Support
• The Forwarder will request from trucking company to bring the cargo at the port of Rotterdam for
loading on the ship. He will forward the RFQ to the trucking company CFDDS Apeldoorn
(Netherland)
• The forwarder will forward the RFQ to the ship agent in order to booking space in the vessel and to
do other procedures. Ship’s agent: Lloydharen ships agency
• The forwarder will forward the RFQ to the Insurance Company in order to ensure on cargo.
insurance Company : Bloemers Nassau Insurance Co
• Sea or Inland Waterway
CIF: Cost, Insurance and Freight
• Parties need to identify the loading port. If no specific loading point is indicated, then seller may select
appoint within the named port that best suits its purpose.
• The seller is obliged to organize export clearance.
• The seller delivers the goods on board of the ship nominated by the seller.5.
• Insurance coverage based on institute Cargo Clauses (C group).
• The seller procures contact for carriage.
Warehouse/ Amersfoort
Port of loading/ Rotterdam
port
Trucking
Company
Port of discharging /Aqaba Port
CIF : Cost, Insurance & Fright (Aqba Port)
Warehouse/
Amersfoort
loading the cargo on board the vessel
and transferred to the Aqba port.
Port of loading/
Rotterdam port
Trucking
Company
Port of discharging
/Aqaba Port
Insurance
Company
Ships agent
Seller’s
Services
Customs
broker
(Incoterms – IAS Paper,2020).
Trucking
Company
Exercise 1
• Discover/ Find the steps of the DAP?
1. The obligations for both seller and buyer.
2. The parties need to be contact in the scenario.
DAP : Delivered at Place (Amman)
• The seller is responsible for arranging carriage and for delivering the goods,
ready for unloading from the arriving conveyance, at the named place.
• Risk transfers from seller to buyer when the goods are available for unloading;
so unloading is at the buyer’s risk.
• The buyer is responsible for import clearance and any applicable local taxes or
import duties.
In the scenario
• Seller’s responsibilities in the scenario: (DAP) Delivered at Place (Amman)
• To contact with Customs clearance
• And with 2 Trucking Company:
• * TC 1 to bring cargo from Warehouse (Amersfoort) to the port of Rotterdam.
• *TC 2 to delivery cargo from the Port of Discharging (Port of Aqba) to
Warehouse (Amman)
• And Ships agent to booking allocation on the vessel and also with custom
broker
DAP: Delivery at Place
Any mode of transport
Parties need to name the place of delivery as precise as possible.
The seller is obliged to organize expert clearance, but no obligation to clear the goods for import.
No Obligation on the seller to procure insurance
No Obligation to unload the goods at destination.
What challenges do you foresee for the seller in in using this Incoterm?
Warehouse/
Amman
Warehouse/ Amersfoort
Port of loading/ Rotterdam port
Trucking Company
Port of discharging /Aqaba Port
Trucking Company
 DAP : Delivered at Place (Amman)
Warehouse/
Amman
Warehouse/ Amersfoort
Port of loading/ Rotterdam port
Port of discharging /Aqaba Port
Trucking Company
Trucking Company
loading the cargo on board
the vessel and transferred to
the warehouse (Amman).
Ships agent
Customs broker
Seller’s
Services
Trucking
Company/Netherland
Trucking
Company/Jordon
pays you back
for losses
incurred on
goods.
Cargo insurance
References:
1. (Incoterms – IAS Paper,2021). Incoterms (International Commercial Terms).
Retrieved on Sunday, December 19, 2020 from ) https://www.iaspaper.net/incoterms-ddp-upsc-economics/
2. (Incoterms-Viva Xpress logistics,2020). Incoterms (International Commercial Terms).
Retrieved on Sunday, December 19, 2020 from ) Incoterms – Viva Xpress Logistics
3. IMCO (2021) Reader: INCOTERMS: TCS Workbook. Sohar: IMCO
The End
(INCOTERMS Scenario Part 1)
Learning Objectives of the semester 2
This year 2 Semester 2 module enables the students
• To adapt the key functions of container shipping and the parties involved in container
shipping.
• The module emphasizes the interaction between the parties involved in shipping and it
incorporates the dependencies.
• It allows the students to identify bottlenecks in processes and apply readily available
knowledge. Besides the specific learning outcomes.
• The module will also develop the students’ managerial skills, such as writing reports and
justify decisions taken during the scenario. Also, Generic Skills like communication (by
telephone and email), working under time pressure and tidiness will be developed.
Two scenarios will be used to achieve these goals, namely
• Incoterm’s scenario and the Shipping Agent/ Forwarder
scenario.
Semester 2
Scenario
• These module will give a practical support to other
modules during this semester such as Business
Management, Business Writing and International
Transactions & Customs.
• During the first 6 weeks of Semester 2, the students will
work as a Forwarder applying different Incoterms on
behalf of his client. The forwarder is like a spider in the
Webb of the logistics world. His area of expertise is very
broad. One of his tasks is to correctly execute the
delivery terms which have been agreed upon between
seller and buyer.
Learning Outcomes
Student will be able to:
➢Define the INCOTERMS.
➢Explain the purpose of the Incoterms.
• Understand the features, obligations and responsibilities
for FCA & DAP (for any mode of transport), FOB & CIF
(for sea and inland waterway).
• Explain the INCOTERMS Scenario.
• The Incoterms rules or International Commercial terms
are a series of pre-defined commercial terms published by
the International Chamber of Commerce (ICC) Widely
used in international commercial transactions.
• INCOTERMS define the mutual obligations of seller and
buyer arising from the movement of goods under an
international contract from the standpoint of risks, costs
and documents.
• INCOTERMS are used to divide transaction costs and
responsibilities between the seller and Buyer.
What are
INCOTERMS?
International
Commercial
TERMS
Purpose of Incoterms
• INCOTERMS rules describe:
• Obligations: Who does What? E.g., who organizes the carriage or
insurance of the goods.
• Risk: where does the risk transfer from the seller to the buyer.
• Cost: Who is responsible for which costs?
INCOTERMS
What does mean the concept of Delivery in the
incoterms?
Delivery
• you should write next to each term the last delivery place
FCA Amersfoort
FOB Rotterdam
CIF Aqaba
DAP Amman
Incoterm Scenario
• The Forwarder
A forwarder is an indispensable party in logistics. He is coordinating a
large part of the logistic process. In this scenario the forwarder will
receive different RFQ’s (requests for quotations) from a shipper. The
RFQ’s include the INCO terms. Based on the Incoterms, the forwarder
must contact the correct parties in order to have the transport
executed. In some cases, the forwarder needs to contact a trucking
company only. In other instances, the forwarder must contact all
parties involved in the execution of the transport.
• The Parties
On behalf of the client, the forwarder must work with different parties
(specialist) in the logistic world. According to the Incoterms, the
forwarder has to arrange transportation for the client and decide which
parties he must use.
The main case in the scenario
• The scenario
• The seller is a medium-sized export company and sells consumer goods to various
markets. After a visit to a trade fair in Dubai, the MENA (Middle East – North
Africa) export department received a request from a (potential) seller who has
goods that must be transported to client’s located Amman, Jordan. The seller
wants to know different prices of the transport of the goods; he wants to know
the prices of the cargo with different delivery terms (EXW, FOB, DAP etc.). (EXW
meaning: to be collected by the buyer at the sellers’ premises, DDP meaning to be
delivered and cleared by the seller on the buyer’s ‘doorstep’).
• The Seller requests the student (the forwarder) to send offers based on the
different incoterms. For each incoterm the seller will send a Request for
Quotation. In the RFQ the seller will describe the goods that must be
transported and the incoterm. Depending on the incoterm that is mentioned in
the RFQ the student must send RFQ’s to different roles in the chain.
Scenario Overview
(FCA) Free
carrier
warehouse
(Amersfoort)
(FOB) : Free on
Board (Port of
Rotterdam)
(CIF) :Cost,
Insurance &
Fright (Aqba
Port)
(DAP):
Delivered at
Place (Amman)
INCOTERMS are
used to divide
transaction costs
and
responsibilities
between the seller
and Buyer.
DOCUMENT FLOW
Seller
Forwarder
Customs
broker
Trucking
company
Ships agent
Insurance
company
Trucking
company
1
RFQ s
(4 X)
RFQ
Offer
RFQ
Offer
RFQ
Offer
RFQ
Offer
RFQ
Offer
Offers
(4 X)
Orders
(4 X)
Warehouse
Amersfoort
Rotterdam
stevedore
Aqaba
stevedore
FCA : you should write next each term the last delivery place
FOB
CIF
DAP
Warehouse
Amman
Rotterdam
stevedore
Warehouse
Amersfoort
PRE-CARRIAGE BY
TRUCKING COMPANY
MAIN CARRIAGE BY
SHIPSAGENT
INSURANCE
CUSTOMS PAPERS
Aqaba
stevedore
Warehouse
Amman
ONCARRIAGE BY
TRUCKING COMPANY
References:
1. (Incoterms – IAS Paper,2021). Incoterms (International Commercial Terms).
Retrieved on Sunday, December 19, 2021 from ) https://www.iaspaper.net/incoterms-ddp-upsc-economics/
2. (Incoterms-Viva Xpress logistics,2021). Incoterms (International Commercial Terms).
Retrieved on Sunday, December 19, 2020 from ) Incoterms – Viva Xpress Logistics
3. IMCO (2021) Reader: INCOTERMS: TCS Workbook. Sohar: IMCO
The End

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