International Trade: Incoterms Module App

🌐 International Trade: Incoterms Module

Learn the fundamental rules of international trade terms and evaluate your understanding of risk, cost, and logistics obligations.

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📖 Knowledge Sheet: Incoterms Demystified

What are Incoterms?
Incoterms (International Commercial Terms) are standard trade definitions published by the International Chamber of Commerce (ICC). First introduced in 1936 and updated periodically (most recently *Incoterms® 2020*), they clearly allocate:

• Costs: Who pays for freight, export/import duties, handling, and insurance.
• Risks: Exactly where risk of loss or damage transfers from seller to buyer.
• Responsibilities: Who arranges carriage, export clearance, and import clearance.

Core Incoterms Comparison

Incoterm	Full Name	Transport Mode	Seller's Responsibility & Risk Point
EXW	Ex Works	Any mode	Minimum seller obligation: Goods made available at seller's premises. Buyer bears all transport costs, export/import clearance, and transit risk.
FOB	Free On Board	Sea / Inland waterway only	Seller clears export customs and loads goods safely on board the vessel nominated by buyer. Risk transfers when goods are on board.
CFR / CNF	Cost and Freight	Sea / Inland waterway only	Seller pays freight to destination port. Risk transfers as soon as goods are loaded on board at the origin port. Insurance is buyer's responsibility.
CIF	Cost, Insurance and Freight	Sea / Inland waterway only	Identical to CFR/CNF, but seller must also purchase marine cargo insurance covering buyer's transit risk.
DDP	Delivered Duty Paid	Any mode	Maximum seller obligation: Seller pays all freight, insurance, and import customs duties/taxes, delivering cargo right to buyer's facility.

✍️ Incoterms Knowledge Assessment

Read each trade scenario and select the most accurate answer.

1. Which organization creates and publishes the official Incoterms rules?

International Chamber of Commerce (ICC) World Trade Organization (WTO) United Nations Logistics Division

2. Under EXW (Ex Works), who is responsible for paying international freight and customs clearance?

The Buyer The Seller Shared equally by both parties

3. In a FOB (Free On Board) transaction, when does the risk of cargo damage transfer to the buyer?

Once the goods are loaded safely on board the vessel at origin port When the vessel arrives at the destination port As soon as goods leave the seller's warehouse door

4. What is the primary difference between CFR / CNF and CIF?

Under CIF, the seller is required to provide cargo insurance Under CIF, the seller pays import taxes at destination CFR is strictly for air cargo, whereas CIF is strictly for maritime cargo

5. Which Incoterm represents the maximum obligation and cost for the seller?

DDP (Delivered Duty Paid) EXW (Ex Works) FOB (Free On Board)

6. Under CFR terms, who bears the risk if cargo is damaged during ocean transit?

The Buyer (since risk transferred upon loading at origin port) The Seller (because the seller paid main ocean freight) The origin port authority

📊 Performance Report

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Detailed Answer Breakdown