PSHI II International Maritime College Used of Cost Insurance & Freight Paper
Discussion report (40 MARKS)
INCOTERMS are one of most important features of international trade. These terms are intended to clearly communicate tasks, costs and risks associated with the transportation and delivery of goods.
Task:
You have 4 different Scenarios, read them carefully. You are encouraged to answer them clearly and elaborate on them with statements and discussions. The final assessment, which is a marked assignment for Shipping, has to be submitted
Note: A plagiarized work will earn a 0. Please write in your own words and your own discussion
Part 1 (10 marks)
A seller of marble stone, based in Nizwa, has a sales agreement with a buyer in Izmir, Turkey. The buyer wants the seller to procure marine and transport insurance. The buyer also wants the seller to clear the goods and pay the import duties. The cargo will be shipped in 40’ft containers. The buyer has suggested to use Incoterms® 2010 CIF, Izmir.
- Discuss the challenges arising from the use of CIF, Izmir, for this particular shipment
- Based on the requirements of the buyer, suggest which Incoterms® 2010 should be used. Explain with reasons.
Part 2 (12 marks)
The marble is sold EXW for $20 per m3. 60m3 has been loaded in each of 10 x 40’ft container. The following costs are made in order to have the cargo delivered at destination:
Pre- carriage from Nizwa to the Port of Sohar: omr 200/20’
Export clearance: omr 35/40’
Terminal Handling charges origin omr 75/teu’
Seafreight: usd 1,500/40’
Terminal handling charges destination: usd 150/40’
On-carriage from Port of Izmir to destination: usd 175/40’
Insurance cost: 5‰ of the EXW value
Customs clearance: 5% of the CIF value
Based on above information, determine the landing costs that will be offered by seller if the Incoterm is: (Note: all calculations based on USD-$)
- DPU, Izmi
- DDP, Izmir Warehouse buyer
- FCA, Port of Sohar OICT Terminal
- Select any of the Incoterms above and discuss the risks, obligation and costs for the selected Incoterm.
Part 3 (10 marks)
‘Company AYZ manufactures large Pipes at its production site in China and sells them to a customer in Oman. The buyer and seller have agreed “CPT Duqm Incoterms 2010” as delivery conditions. The company employs a service provider to transport the tanks to Oman. During transportation the tanks are damaged and the customer refuses to accept them. He demands the delivery of new tanks.’
DISCUSSION QUESTION: Is responsibility for the damage to the tanks to be borne by the buyer or seller? Can the buyer refuse to pay for the goods or is he bound to pay the sale price despite the damage? Has the seller discharged his obligation to deliver the goods? Discuss all these questions in a short paragraph
Part 4 (8 marks)
Corporation XYZ, a company based in Jeddah, is exporting goods to their customer in Southampton, The United Kingdom. This shipment will be a parcel shipment consisting of four cartons, to be shipped by a courier service. The British customer wants Corporation XYZ to use their own appointed courier and have agreed to clear for import and pay VAT as long as Corporation XYZ clears export out of the Saudi Arabia. The customer would like Corporation XYZ to arrange transport from their warehouse, directly to their warehouse in Southampton.
What INCOTERM should be used? Defend your answer with evidence and clarification
Additional guidelines for English:
- Your discussion paper must be type writing
- Write your full name, your ID, Class section in front page.
- Write your discussion clearly and professionally.
Format of the report
Font type: Times New Roman
Font size: 12
Spacing: Single Spacing
Paragraph: Justify left and right side
Submission document: Microsoft Word ONLY
Avoid any cheating/copying that may result in an instant failing of the final assessment.
-End of Questions & Good Luck-
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