Incoterms Costing Exercise

You are employed as a buyer by IT Imports from Peterborough, Ontario Canada. Your company is negotiating the import of a bulk order of 45 bundles of solar panels, from Solar Items Co. located in Taipei, Taiwan.

Shipping Process:

• The goods are to be shipped from The Solar Items Co. by Taipei Trucking to the port of Keelung, Taiwan, where they will be loaded on the ship SS FORMOSA for ocean voyage toWashington U.S.A
• From Tacoma, Washington U.S.A the goods will be transported by CN Rail to Toronto Intermodal Terminal, crossing at the Detroit /Windsor Canada border. Note: goods clear import customs at the Toronto Intermodal Terminal.
• From Toronto they will be brought by Overland Trucking to Peterborough.

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 below.Given the nature of the cargo and mode of transportation it is not recommended that goods be shipped uninsured.

Seller's Itemized Pricing (for calculated price x number of bundles)$ CAD/bundle

The cost of goods at Solar Items Co. factory1040.00

Loading on vessel at Keelung Port28.00

Inland freight (Toronto intermodal terminal to Peterborough)17.00

Ocean freight232.00

Rail cost (Tacoma Port U.S.A. to Toronto Intermodal terminal)26.00

Marine Insurance35.00

Export Declaration / documentation6.00

Inland freight (Solar Items Co. to Keelung Port)20.00

Import declarations, duties/taxes50.00

Basic Export Packing19.00

Options:

1. You (buyer) want the seller to deliver the goods insured to Toronto Intermodal Terminal, but you will assume risk for them once they are given to Taipei Trucking in Taiwan.

Incoterm:

Location:

Seller's Price to Buyer:

2. You (buyer) want the seller to deliver the goods to your warehouse in Peterborough, where you will assume risk for them. The seller will need to account for goods to CBSA and pay for import duties.

Incoterm:

Location:

Seller's Price to Buyer:

3. You (buyer) want the seller to deliver goods loaded on the ship SS Formosa in Keelung, Taiwan. You will take responsibility for the goods after they are being loaded on the ship SS Formosa in the port of Keelung Taiwan and make arrangements to bring them to Peterborough.

Incoterm:

Location:

Seller's Price to Buyer:

4. You (buyer) want the seller to deliver the goods to Toronto Intermodal Terminal, where you will assume all costs and risk. You will pay for unloading there, import clearance and subsequent delivery to Peterborough.

Incoterm:

Location:

Seller's Price to Buyer:

5. You (buyer) want the seller to deliver the goods not insured to the port in Tacoma Washington. You will assume all risk after the goods are being loaded on the SS Formosa in Keelung Taiwan.

Incoterm:

Location:

Seller's Price to Buyer:

6. You (buyer) want the seller to deliver the goods insured to Tacoma Port, Washington U.S.A but you will accept all risks as soon as they are loaded on the ship SS FORMOSA at the port of Keelung Taiwan.

Incoterm:

Location:

Seller's Price to Buyer:

7. You (buyer) want the seller to deliver the goods to Toronto Intermodal Terminal. You will arrange for insurance, and risk will be transferred when the goods are delivered to Taipei Trucking.

Incoterm:

Location:

Seller's Price to Buyer:

8. You (buyer) want the seller to deliver the goods to Taipei Trucking in Taipei. You will accept risk for the goods once they are in possession of Taipei Trucking and you will make the necessary arrangements to bring them to Peterborough.

Incoterm:

Location:

Seller's Price to Buyer: