Incoterms

Question 1

Internationally accepted terms defining the responsibilities of exporters and importers

Answer 1

Incoterms 2020

Question 2

The world’s essential terms of trade for the sale of goods.

Answer 2

Incoterms 2020

Question 3

Provide specific guidance to individuals participating in the import and export of global trade on a daily basis.

Answer 3

Incoterms 2020

Question 4

Incoterms serves as:

Answer 4

agreed terms of purchase and delivery.

Question 5

Incoterms 2020 is launched by:

Answer 5

International Chamber of Commerce (ICC).

Question 6

refers to freight cost, by air or sea, charged by the carrier (airlines/shipping lines) or amount paid by the shipper to carrier for the transport of goods from country of origin to country of destination.

Answer 6

MAIN CARRIAGE

Question 7

refers to the cost of transport for hauling goods from seller’s premises to a designated point at country of origin. Also known as “Origin Inland Freight”.

Answer 7

PRE-CARRIAGE

Question 8

refers to the cost of transport for hauling goods from the port of discharge to buyer’s warehouse or designated place at destination. Also known as “Destination Inland freight”.

Answer 8

ON-CARRIAGE

Question 9

means the main carriage for the exported goods was paid by seller prior to departure from country of origin and therefore included in seller’s invoice price

Answer 9

FREIGHT PRE-PAID

Question 10

means the main carriage was paid by the buyer upon arrival of imported goods at country of destination and not included in seller’s invoice price.

Answer 10

FREIGHT COLLECT

Question 11

refers to inter-continental transit of goods involving main carriage that can be carried out both by air or by sea.

Answer 11

MULTIMODAL TRANSPORT

Question 12

generic name for cargo insurance. It refers to the insurance premium paid in the international transport of goods by air/sea. This is procured by the buyer or seller to cover risks against loss or damage to the cargo during pendency of the voyage from country of origin to destination.

Answer 12

PORT TO PORT INSURANCE

Question 13

Insurance coverage taken up by seller to cover risks against loss or damage to the goods while in transit from his premises to a delivery point at origin.

Answer 13

INTERNAL INSURANCE

Question 14

refers to cost of handling and moving loose or breakbulk cargoes within a seaport at country of origin or destination.

Answer 14

ORIGIN/DESTINATION LCL CHARGES

Question 15

refers to cost of handling and moving containerized cargoes within the terminal facilities of a seaport at country of origin or destination.

Answer 15

ORIGIN/DESTINATION TERMINAL HANDLING CHARGES (THC)

Question 16

refers to incidental expenses (except main carriage and port to port insurance) incurred by the seller/exporter in relation to fulfilling his contractual obligation to deliver the goods for each of the 11 incoterms. (e. g. pre-carriage/on-carriage, export documentation/clearance fees, forwarder’s fees, THC/LCL charges, export/import duties & taxes, etc.)

Answer 16

OTHER CHARGES (O/C)

Question 17

refers to airlines, shipping lines or their agents (NVOCC/IFF)

Answer 17

CARRIER

Question 18

refers to bringing of goods to a specific place or to a carrier/forwarder at country of origin or destination and used as reference point when liability against risk for loss of or damage to the goods passes on from seller to buyer

Answer 18

DELIVERY

Question 19

INCOTERMS 2020 rules as obligations of seller and buyer to each other classified into:

Answer 19

1. General Obligations
2. Delivery/Taking Delivery
3. Transfer of risk
4. Carriage
5. Insurance
6. Delivery/transport document
7. Export/Import clearance
8. Checking/packaging/marking
9. Allocation of costs
10. Notice

Question 20

INCOTERMS, TRANSACTION ARE BETWEEN:

Answer 20

Seller and buyer

Question 21

MERCHANT/SHIPPER/EXPORTER)
- INCHARGE FOR THE DELIVERY OF GOODS
- RISK ORIGINATES

Answer 21

Seller

Question 22

(PURCHASER/IMPORTER)
- INCHARGE FOR TAKING THE DELIVERY OF GOODS
- RISK IS TRANSFERRED

Answer 22

Buyer

Question 23

SIGNIFICANCE OF DELIVERY IN INCOTERMS

Answer 23

1. Risk is transferred from the seller to the buyer
   a. Loss, damage, deterioration
2. Buyer assumes all expenses to bring goods to final place of destination depending on contract price which is expressed in INCOTERMS 2020.
   a. Most basic Ex Works: ready for pickup by the buyer.
   b. Most complete DDP: delivery is made by the seller to the named place of destination ready for unloading at buyer’s expense and risk
3. Except “C” Terms: Point of transfer of risk different from starting point buyer assumes costs

Question 24

Incoterms has four groups, namely:

Answer 24

E GROUP ( EXW)
F GROUP ( FCA, FAS, FOB)
C GROUP ( CFR, CIF, CPT, CIP)
D GROUP ( DAP, DPU, DDP)

Question 25

E GROUP

Answer 25

EXW

Question 26

F GROUP

Answer 26

FCA
FAS
FOB

Question 27

C GROUP

Answer 27

CFR
CIF
CPT
CIP

Question 28

D GROUP

Answer 28

DAP
DPU
DDP

Question 29

CATEGORY E

Answer 29

Departure

Question 30

EXW (Ex Works)

Answer 30

named place of delivery

Question 31

FREIGHT PRE-PAID/COLLECT

Answer 31

Buyer’s option

Question 32

CATEGORY F

Answer 32

Shipment

Question 33

FCA

Answer 33

Free Carrier - named place of delivery

Question 34

FAS

Answer 34

Free Alongside Ship - named port of shipment

Question 35

FOB

Answer 35

Free On Board - named port of shipment

Question 36

MAIN CARRIAGE UNPAID BY SELLER. (

Answer 36

FREIGHT PAID BY BUYER UPON ARRIVAL OF GOODS AT DESTINATION).