Incoterms In Logistics: Trivia Quiz!

1. Why is it better to ship goods as pallets instead of loose cartons?

To increase the weight of the package

Airlines / shipping lines do not accept loose cartons

Pallets are easier to handle and are more secure

Shipping goods as pallets instead of loose cartons is better because pallets are easier to handle and provide more security. When goods are stacked on a pallet, they are less likely to shift or get damaged during transportation. Pallets also make it easier to load and unload goods, as they can be moved with forklifts or pallet jacks. Additionally, pallets can be stacked, allowing for more efficient use of space in shipping containers or trucks.

Explanation

Shipping goods as pallets instead of loose cartons is better because pallets are easier to handle and provide more security. When goods are stacked on a pallet, they are less likely to shift or get damaged during transportation. Pallets also make it easier to load and unload goods, as they can be moved with forklifts or pallet jacks. Additionally, pallets can be stacked, allowing for more efficient use of space in shipping containers or trucks.

2. At what point does risk transfer from the seller to the buyer if the terms of shipment are DAP (destination address)?

Once goods are handed over to the first carrier or forwarder

Once goods are delivered at the destination address

Once goods leave the factory at origin

The correct answer is "Once goods are delivered at the destination address." In the terms of shipment DAP (destination address), the risk transfers from the seller to the buyer once the goods are delivered at the destination address. This means that the seller bears the risk and responsibility for the goods until they are delivered to the specified destination address. Once the goods are delivered, the buyer assumes the risk and responsibility for any damage or loss that may occur.

Explanation

The correct answer is "Once goods are delivered at the destination address." In the terms of shipment DAP (destination address), the risk transfers from the seller to the buyer once the goods are delivered at the destination address. This means that the seller bears the risk and responsibility for the goods until they are delivered to the specified destination address. Once the goods are delivered, the buyer assumes the risk and responsibility for any damage or loss that may occur.

3. Shipping lead time from China to Zambia is 65 days by the sea and 15 days by air. If a customer does not want the lead time to exceed more than 35 days and also does not want to pay very high freight costs, what do we tell him?

We are unable to handle freight for him

Offer a combination of sea and air freight to manage within the required transit time

Advise that he needs to accept only air freight option as sea freight will take 65 days

We should suggest offering a combination of sea and air freight to manage within the required transit time. This option allows the customer to balance between a shorter lead time and avoiding high freight costs. By using both sea and air freight, the customer can expedite the delivery process while keeping the costs relatively low.

Explanation

We should suggest offering a combination of sea and air freight to manage within the required transit time. This option allows the customer to balance between a shorter lead time and avoiding high freight costs. By using both sea and air freight, the customer can expedite the delivery process while keeping the costs relatively low.

4. When the Incoterm is Exworks, the buyer's nominated freight forwarder must arrange for the loading of the goods into the truck at the factory. In practice, the seller assists in this task.

True

False

When the Incoterm is Exworks, it means that the seller's responsibility ends once the goods are made available at their premises. The buyer's nominated freight forwarder is then responsible for arranging the loading of the goods onto the truck at the seller's factory. However, in practice, the seller often assists in this task to ensure a smooth process. Therefore, the statement is true.

Explanation

When the Incoterm is Exworks, it means that the seller's responsibility ends once the goods are made available at their premises. The buyer's nominated freight forwarder is then responsible for arranging the loading of the goods onto the truck at the seller's factory. However, in practice, the seller often assists in this task to ensure a smooth process. Therefore, the statement is true.

5. Why are LCL lead times longer than FCL lead times?

Shipments may move on different vessels

Shipments may take different routes

Consolidation and deconsolidation procedures at origin and destination ports take longer

All of the above

LCL lead times are longer than FCL lead times because shipments may move on different vessels, take different routes, and consolidation and deconsolidation procedures at origin and destination ports take longer.

Explanation

LCL lead times are longer than FCL lead times because shipments may move on different vessels, take different routes, and consolidation and deconsolidation procedures at origin and destination ports take longer.

6. When do we invoice if Incoterms 2010 are CIP (destination address)

Once goods are handed over to the first carrier or forwarder

Once goods arrive destination airport / seaport

Once goods leave the factory at origin

In the CIP (Carriage and Insurance Paid to) term of Incoterms 2010, the seller is responsible for delivering the goods to the first carrier or forwarder. Therefore, the invoice is typically issued once the goods are handed over to the first carrier or forwarder, as this marks the point at which the seller has fulfilled their responsibility for delivery. The buyer is then responsible for the goods from this point onwards.

Explanation

In the CIP (Carriage and Insurance Paid to) term of Incoterms 2010, the seller is responsible for delivering the goods to the first carrier or forwarder. Therefore, the invoice is typically issued once the goods are handed over to the first carrier or forwarder, as this marks the point at which the seller has fulfilled their responsibility for delivery. The buyer is then responsible for the goods from this point onwards.