Groupiva has been in the local Chile aquaculture industry for nearly fourteen years. They raise salmon and trout for local markets, and have recently negotiated a deal with a small fish processing plant that distributes under a major product label in Chile. Although they run a rather small operation, employing 16 people year-round, Groupiva believes they are in a position to export some surplus and perhaps broker further deals with fish processing plants around the East Coast. They do want to maintain ties with the local fresh fish markets, but sales have been steadily decreasing since the sudden influx of cheaper Oregon salmon on the market. They know their stock is of higher quality and could be exported abroad quite profitably. Groupiva has contacted the government and enrolled in small business export initiatives. This has enabled the company to attend aquaculture conferences abroad and offered them the opportunity to network and make contact with Hungry Ox Food Inc., a Canadian importer. Hungry Ox Food Inc. was eager to negotiate a contract for 2 tonnes of Chile salmon to distribute to a number of clientele throughout the country. Payment of credit was arranged by a Canadian bank. The documents required were a commercial invoice, the insurance policy, a marine bill of lading, and a certificate of quality. Groupiva has arranged to have their fish inspected by a nationally accredited standards organization. Both parties agree in their contract that Groupiva will pay freight to Hamilton and will also insure the shipment. Once the salmon has been delivered, Hungry Ox Food Inc will assume all responsibility. The Chile Food Inspection Agency reports to Groupiva that the fish to be exported is of superior quality, with a fat content of 11 percent. The certificate of quality includes a code for superior quality and also states a color code that is standard to the Salmon scale. Colour coding is a common practice in the fish industry and provides a method of standardization for something as subjective as colour. Both in production and sales, colour is the most important quality parameter for salmon. Salmon buyers can request information on the colour of a delivered lot in the form of a number corresponding to a colour number on the Roche scale. Another salmon colour reference is the colour number on the Salmon scale. Groupiva's bank, acting as their export advisor, contacts the Company to tell them that the letter of credit has fallen though because the certificate of quality is vague and it cannot be ascertained if the shipment has passed its quality certification. The documents were delivered directly to the buyer for payment. Hungry Ox Food insists on inspecting the shipment upon arrival. Hungry Ox Food is not an experienced salmon importer and usually deals with Spanish Blue Fish and Irish Char. They are not in disagreement that the salmon shipment has passed quality inspection. Upon Hungry Ox Food's inspection they claim that the fat content of the stock is much higher than is claimed in the quality inspection. They reject the sale and will accept substitute goods but are claiming damages for loss of profit. Groupiva management wonders if they need to rethink their exporting strategy.

Taking at look the material characteristics and traffic management, read the case on Hungry Ox Food Inc. and answer the questions below. With the goal to reduce any potential transportation risks and legal liability, make sure to refer to freight regulations in your response 1. Based on your knowledge of international commercial terms and the material outlined in the case, which Incoterm would best represent the terms of sale between Hungry Ox Food Inc. and Groupiva? Given your answer, explain the responsibilities of each party. (7 marks) 2. Outline things that need to be considered when transporting the salmon shipment from Chile to Canada. Think about the product, climate, distance, export documents etc. (7 marks) 3. Considering the movement of large shipments, describe your thoughts on the importance of incoterms and how to include in supplier transactions. (6 marks)