Case Study : Balancing Costs and Control in Machinery Import

Title: "Heavy Machinery, Hefty Decisions: Balancing Costs and Control in Import"

Description:

Construct Co$,$ a construction firm, is importing specialized machinery from a foreign supplier. The machinery is costly$,$ and any damages in transit could lead to significant financial loss and project delays. Construct Co is considering the Incoterm CPT $($Carriage Paid To$),$ which means the seller pays for the transport but Construct Co assumes risk once the machinery is handed over to the first carrier. The alternative is DAP $($Delivered at Place$),$ where the seller assumes all risks and costs until the machinery arrives at Construct Co's site.

Questions:

With the high value and potential risk associated with the machinery, how should Construct Co decide between CPT and DAP?

What are the implications for Construct Co in terms of risk and insurance if they opt for CPT$?$

If Construct Co chooses DAP, what responsibilities would they avoid, and what costs might they incur?

Case Study : Global Auto Parts Distribution

Title: "Precision and Responsibility: Exporting Auto Parts Globally"

Description:

Auto GlobalParts, a leader in automotive component manufacturing, has to fulfill a contract with several international clients who have placed large, time$-$sensitive orders. The shipments include a mix of ready$-$to$-$install parts and components requiring further assembly. Auto Global Parts needs to ensure that the terms selected minimize their liability for potential damage during the long transit without compromising delivery timelines. They are evaluating whether DAP $($Delivered at Place$)$ offers the best balance between cost and responsibility or if CIP $($Carriage and Insurance Paid to$)$ would be more prudent given the value and fragility of the goods.

Questions:

What are the key considerations for Auto GlobalParts in choosing between DAP and CIP for their international clients?

How do the risks and obligations of Auto GlobalParts differ under DAP compared to CIP?

What might be the long$-$term implications for customer relationships based on the chosen Incoterm?