INCOTERMS 2020 Overview and Formulas
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Questions and Answers

What does DPU stand for in shipping terms?

  • Delivered Duty Unpaid (correct)
  • Delivery Point Unload
  • Delivery Paid Unconfirmed
  • Delivered Payment Unlocked

    • Which of the following is NOT included in the calculation of FAS?

  • Forwarder’s Fee
  • Government Customs Clearances
  • Export Documentation
  • Destination Unloading (correct)

    • What are the components of DPU as per the given equation?

  • EXW + ORIGIN O/C + FRT + DESTINATION O/C (correct)
  • EXW + Shipping Costs + Taxes
  • FOB + FRT + Miscellaneous Costs
  • FAS + FOB + Government Fees

    • How is FAS calculated?

    <p>EXW + ORIGIN O/C</p> Signup and view all the answers

    Which of the following is included in ORIGIN O/C?

    <p>Inland Freight</p> Signup and view all the answers

    Which of the following reflects an expense that may be considered a miscellaneous cost?

    <p>Warehouse Storage</p> Signup and view all the answers

    What type of charge does 'THC' refer to in the context provided?

    <p>Total Handling Charges</p> Signup and view all the answers

    What does FRT stand for in the context of shipping calculations?

    <p>Freight Charges</p> Signup and view all the answers

    What does FOB stand for?

    <p>Free on Board</p> Signup and view all the answers

    What is the formula for calculating FOB?

    <p>EXW + Origin O/C</p> Signup and view all the answers

    Which expense is NOT included in the calculation of FOB?

    <p>Destination Warehousing</p> Signup and view all the answers

    What does CFR stand for?

    <p>Cost and Freight</p> Signup and view all the answers

    How is CFR calculated from FOB?

    <p>CFR = FOB + FRT</p> Signup and view all the answers

    Which of the following is included in the Origin O/C calculations for FOB?

    <p>Trucking and Haulage</p> Signup and view all the answers

    Which expense would likely appear in the Destination O/C for FOB?

    <p>Destination Unloading Costs</p> Signup and view all the answers

    Which calculation method would include costs for Customs Clearances?

    <p>FOB</p> Signup and view all the answers

    What does EX-WORKS (EXW) consist of?

    <p>Cost of goods only</p> Signup and view all the answers

    Which additional costs are included in the FCA formula?

    <p>Cost of goods plus various origin charges</p> Signup and view all the answers

    What elements make up the DAP formula?

    <p>FOB, freight, and destination operational costs</p> Signup and view all the answers

    Which of the following is NOT a component of the FCA formula?

    <p>Destination Import Arrastre Charge</p> Signup and view all the answers

    What does DAP stand for in incoterms?

    <p>Delivered at Place</p> Signup and view all the answers

    EXW is primarily concerned with which aspect?

    <p>Cost of goods</p> Signup and view all the answers

    Which of the following is included in the FCA charges?

    <p>Export documentation costs</p> Signup and view all the answers

    Which option best describes the relationship between FCA and EXW?

    <p>FCA uses EXW as its base cost</p> Signup and view all the answers

    What does DDP stand for in transportation terms?

    <p>Delivered Duty Paid</p> Signup and view all the answers

    Which element is NOT included in the calculation of DDP?

    <p>Import Insurance Charges</p> Signup and view all the answers

    What does FCA stand for in shipping terms?

    <p>Free Carrier</p> Signup and view all the answers

    Which of the following costs is NOT associated with the Origin O/C?

    <p>Destination LCL Charges</p> Signup and view all the answers

    In the context of DDP, what does FRT commonly refer to?

    <p>Freight</p> Signup and view all the answers

    Which component is part of miscellaneous expenses in transportation?

    <p>Warehousing</p> Signup and view all the answers

    What is included in the Destination O/C?

    <p>Import Duties and Taxes</p> Signup and view all the answers

    Which of the following is a component of handling charges at the destination?

    <p>Import Documentation</p> Signup and view all the answers

    What does DDP stand for in shipping terms?

    <p>Delivered Duty Paid</p> Signup and view all the answers

    What is the formula for calculating CIF?

    <p>CIF = EXW + ORIGIN O/C + FRT + INS</p> Signup and view all the answers

    Which component is NOT included in the DDP formula?

    <p>INS</p> Signup and view all the answers

    What are 'Destination Total Handling Charges' categorized as in CIF?

    <p>DESTINATION O/C</p> Signup and view all the answers

    Which costs are covered under the CIF calculation?

    <p>Export Duties and Taxes</p> Signup and view all the answers

    Which of the following formulas accurately describes the relationship between CFR and DDP?

    <p>CFR = DDP - DESTINATION O/C</p> Signup and view all the answers

    What does the acronym FOB represent in shipping calculations?

    <p>Free on Board</p> Signup and view all the answers

    Which of the following is NOT a component of the CFR formula?

    <p>DESTINATION O/C</p> Signup and view all the answers

    Study Notes

    INCOTERMS 2020 Formulas

    • Ex-Works (EXW)

      • Formula: EXW = Cost of Goods
      • Under this term, the seller's responsibility is minimal, only ensuring the goods are available for pickup.

    • Free Carrier (FCA)

      • Formula: FCA = EXW + Origin O/C (Loading to Truck/Inland Freight, Trucking, Haulage, and more).
      • Includes costs like customs clearances and export documentation.

    • Free Alongside Ship (FAS)

      • Formula: FAS = EXW + Origin O/C + Freight (FRT) + Destination O/C.
      • The seller delivers the goods alongside the ship, transferring risk to the buyer at that point.

    • Free on Board (FOB)

      • Formula: FOB = EXW + Origin O/C + FRT + Destination O/C.
      • The seller covers costs and risks until the goods are loaded on the vessel at the port.

    • Cost and Freight (CFR)

      • Formula: CFR = FOB + FRT = EXW + Origin O/C + FRT.
      • The seller pays for transportation to the destination port but the risk transfers once loaded on the ship.

    • Cost, Insurance, and Freight (CIF)

      • Formula: CIF = FOB + FRT + Insurance (INS) = EXW + Origin O/C + FRT + INS.
      • Offers additional protection by requiring the seller to insure the goods during transport.

    • Delivered at Place (DAP)

      • Formula: DAP = FOB + FRT + Destination O/C.
      • Seller assumes responsibility for delivering goods to a specified location, ready for unloading.

    • Delivered at Place Unloaded (DPU)

      • Formula: DPU = FCA + FRT + Destination O/C.
      • Unique as it requires the seller to unload the goods at the destination.

    • Delivered Duty Paid (DDP)

      • Formula: DDP = FOB + FRT + Destination O/C.
      • The seller handles all risks and costs, including import duties and taxes, until goods reach the buyer.

    • Shared Elements in Terms

      • Many terms share common components like EXW, Origin O/C, and Destination O/C, indicative of various responsibilities and cost distributions between sellers and buyers.

    • Importance of Understanding Terms

      • Correct usage of INCOTERMS helps clarify responsibilities, manage risks, and calculate costs effectively in international trade operations.

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    Incoterms 2020 Formulas PDF

    Description

    Explore the key formulas and responsibilities associated with the INCOTERMS 2020. This quiz covers terms such as Ex-Works, Free Carrier, and Cost, Insurance and Freight, detailing the seller's obligations and cost components involved in international shipping. Test your knowledge on these crucial shipping terms.

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