Incoterms Costing Exercise Scenario: You are employed at an import company (Southern Construction) negotiating a purchase for 5 FCL quantity of machinery with a prospective seller (Foshan Exports) in China. You are still considering the terms under which you would like to purchase and so have requested some options from the seller (supplier).

Customs Customs

Foshan Orient Shenzhen Hong Kong Port of CP Rail CP Intermodal Oceanland Southern Construction Exports Trucking Port Express Vancouver Vaughan Transport Brampton, Ontario Foshan China

Shipping Details/Routing:

The goods would be loaded into 5 full containers at Foshan Exports warehouse in Foshan, China and would be picked up by Orient Trucking and delivered to the port of Shenzhen. From there, the containers would clear export customs and be loaded on the ship Hong Kong Express for ocean voyage to the Port of Vancouver. From the Port of Vancouver, the goods would go by rail to CP Intermodal Terminal where they would clear import customs. Once cleared, Oceanland Transport would pick up from there and deliver the containers to Southern Construction in Brampton, Ontario.

As part of the negotiation process, you are considering different options and need to identify the most suitable incoterm, location and associated purchase price (breakdown of charges below) under each of the given circumstances outlined.

Sellers Cost List: $ CAD

Product (Machinery cost) 35,000.00 per FCL Loading of Containers at Foshan Exports 550.00 per FCL Marine Insurance 105.00 per FCL Import Clearance including Duties & Taxes 2500.00 per FCL Trucking from CP Intermodal to Southern Construction 490.00 per FCL Unloading at Southern Construction in Brampton 530.00 per FCL Export Clearance 65.00 per FCL Export Packaging 250.00 per FCL Rail from Vancouver to CP Intermodal (incl unloading) 2600.00 per FCL Ocean Freight 3100.00 per FCL Unloading from Ship in Vancouver 475.00 per FCL Trucking to Port of Shenzhen 300.00 per FCL Loading on Ship in Shenzhen 365.00 per FCL

1. You (buyer) want the exporter to load the goods into containers. You will accept risk for the goods once they are in possession of Orient Trucking and you will make all the necessary arrangements to bring them to Southern Construction, Brampton. Incoterm: FCA Location: ORIENT TRUCKING Price:

2. You (buyer) want the exporter to deliver the goods to the CP Vaughan Intermodal warehouse. You will arrange for your own cargo insurance, and risk will be transferred when the goods are given to Orient Trucking. Incoterm: CIP Location: CP VAUGHAN INTERMODEL Price:

3. You (buyer) want the goods delivered to Southern Construction, at that point you will assume risk for unloading them and you will handle all import clearance. Incoterm: Location: Price:

4. You (buyer) want the exporter to deliver the goods insured to Vancouver Port but you will accept all risks as soon as the goods are given to Orient Trucking. Incoterm: Location: Price:

5. You (buyer) have determined that the exporter doesnt have great freight rates. You prefer to have the exporter load the goods into containers, cleared for export and deliver to the port of Shenzhen. You will take care of the rest.

Incoterm: Location: Price:

6. You (buyer) want the goods delivered to Southern Construction, Brampton, where you will assume risk for unloading them. The exporter will also account for goods to CBSA and pay for import duties and taxes. Incoterm: Location: Price:

7. You (buyer) want the goods delivered unloaded from the ship in Vancouver. At that point you will take risk and make all arrangements for carriage and clearance from there. Incoterm: Location: Price:

8. You (buyer) want the goods delivered to and unloaded from the rail at CP Vaughan Intermodal Terminal, where you will assume all costs and risk from there to Southern Construction, Brampton.

Incoterm: Location: Price: