INTL-Global Logistics-Individual Assignment (2)
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Dec 6, 2023
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Course Name:
Global Logistics
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
VW,
Taubaté,
Brazil
Sao Paulo
International
Airport
Port of santos,
Brazil
||
Port of Miami,
Florida
YYZ, Toronto
VW, 500
Adelaide St E.,
Toronto,Canada
Cost
Transportation
Insurance
Buyers Option
Risk of ownership
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Global Logistics
CENTENNIAL
COLLEGE
Individual Assignment
pre-carriage
main carriage
on-carriage
2.
(1 mark) What is the complete Incoterm
®
?
Ans. EXW,
VW, Taubaté, Brazil
, Incoterms® 2020.
3.
(1 mark) Shipment A – Incoterm
®
is CPT
Budds BMW, Canada, Oakville, ON, CA
Schenker Whse, Montreal, Quebec
Port of Halifax, NS
||
Port of Antwerp, Belgium
Schenker, Whse, Munich, Germany
BMW, Munich, Germany
Cost
Transportation
Insurance
Sellers Option
Risk of ownership
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Global Logistics
CENTENNIAL
COLLEGE
Individual Assignment
pre-carriage
main carriage
on-carriage
4.
(1 mark) What is the complete Incoterm
®
?
Ans. CPT, Schenker Whse, Munich, Germany Incoterms® 2020.
5.
(1 mark) Shipment B – Incoterm
®
is CIF port
VW,
Taubaté,
Brazil
Sao Paulo
Internation
al
Airport
Port of
Santos,
Brazil
||
Port of
Miami,
Florida
YYZ,
Toront
o
VW, 550 Adelaide
St E., Toronto,
Canada,
Cos
t
Transportati
on
Insurance
Sellers Obligation
Minimum Cover
Only
Risk of ownership
pre-carriage
main carriage
on-carriage
6.
(1 mark) What is the complete Incoterm
®
?
Ans. CIF, Port of Miami, Florida, Incoterms® 2020.
7.
(1 mark) Shipment A – Incoterm® is DPU port
Budd’s BMW
Canada, Oakville,
ON, CA
Schenker Whse,
Montreal,
Quebec
Port of Halifax,
NS
||
Port of Antwerp,
Belgium
Schenker Whse,
Munich,
Germany
BMW, Munich,
Germany
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Global Logistics
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Individual Assignment
Cost
Transportation
Insurance
Sellers option
Risk of ownership
pre-carriage
main carriage
on-carriage
8.
(1 mark) What is the complete Incoterm
®
?
Ans. DPU , Schenker Whse, Munich, Germany , Incoterms® 2020
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.
Ans. True. Delivered at Place, or DAP, indicates that the seller promises to deliver the
goods at a predetermined location and assumes all associated expenses and risks.
The organization or buyer only needs to discharge the items at the prearranged
location. Since DAP is applicable to all forms of transportation, it offers assurance of
cargo receipt. The buyer is responsible for all import taxes, including customs fees.
11.
(1 mark) What potential problem is there with EXW that makes FCA a better selection
in most cases?
Ans. The issue with EXW is that the buyer must understand the export protocols and
bear full responsibility for all expenses related to transporting the items to their
destination. This can be costly, hazardous, and time-consuming. In FCA, on the other
hand, the whole expense of transporting the products to their destination rests on the
seller. Whereas EXW forbids it, FCA gives the customer the option to continue the
inspection. Finally, the buyer may incur extra expenses for packing and shipping
when purchasing EXW. If FCA is selected, the seller is still in charge of the product's
security up until the agent or buyer receives it.
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
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Global Logistics
CENTENNIAL
COLLEGE
Individual Assignment
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.
Ans: DDP, DAP, DPU
15.
(1 mark) List all the Incoterms® in which responsibility for costs and risks are divided
at two different places:
Ans: CIP, CPT, CFR, CIF
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
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Global Logistics
CENTENNIAL
COLLEGE
Individual Assignment
Compare and contrast the following two terms:
(2 marks each)
CPT
CIF
17.
Mode(s) of
transportation
Multimodal (except
maritime)
Maritime (Sea,
waterways)
18.
Place of division of
cost obligations
Payment to a designated
location is the seller's
obligation. Costs are
borne by the buyer after
the carrier is picked up.
Delivering products,
carriage fees, and
insurance up to the
destination port are
the seller's expenses.
19.
Place of transfer of
responsibility for risk of
loss
Risk transfer from the
seller to the buyer when
the goods have been
delivered to the carrier
Risk transfer from the
seller to the buyer
when the goods pass
the ship's rail
20.
Insurance
requirements
Optional for the seller
Minimum cover –
Seller obligation
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®?
Ans. FCA, Sammy’s warehouse. Incoterms® 2020
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
?
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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?
Ans: CPT, Port Toronto, Incoterms
® 2020
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
®
:
FCA Manufacturer plant, Montreal, Canada, Incoterms® 2020
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Global Logistics
CENTENNIAL
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Individual Assignment
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®:
FCA export terminal Montreal, Canada, Incoterms® 2020
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.
Ans. CIP Freight Terminal Tokyo, Japan Incoterms 2020
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.
Ans. CPT Freight Terminal HND Tokyo Airport, Tokyo, Japan Incoterms
2020
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
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Global Logistics
CENTENNIAL
COLLEGE
Individual Assignment
the goods once they are in the possession of PRO NORTH Trucking and will make
all the necessary arrangements to bring them to Osaka.
Ans. EXW PRO NORTH, B.C., Canada, Incoterms 2020
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.
Ans. FCA Freight Terminal, Vancouver International, B.C., Canada,
Incoterms 2020
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.
Ans. CPT Schenker Logistics, Tokyo Airport, Incoterms 2020
35.
(2 marks) Compare and contrast the insurance rules from Incoterms® 2010 to
Incoterms® 2020.
a.
Insurance: In CIP and CIF, insurance is mentioned and explained in detail.
Different levels of insurance coverage are provided under the Incoterms
2020 rules in the Carriage and Insurance Paid To (CIP) and Cost Insurance
and Freight (CIF) regulations. The Institute Cargo Clauses (C) remain the
default level of coverage under the CIF Incoterms rule, which is reserved
for use in maritime trade and is frequently employed in commodity trading.
Parties may choose to agree to a greater level of insurance protection. But
currently, to comply with the Institute Cargo Clauses (A) or other
comparable clauses, the CIP Incoterms norm demands a higher level of
cover.
b. New Term(s): DPU is now the Incoterm for DAT. Delivered at point
Unloaded (DPU) has replaced the previous Delivered at Terminal (DAT) to
emphasize that the point of destination is not limited to a "terminal."
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
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respect to insurance?
Ans. I would suggest that the client acquire insurance from a respectable insurance
provider with international reach.
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