Ocean Sea Freight Incoterms and Trade Terms 2

Question 1

What does 'DAP (Delivered at Place)' mean in ocean freight?

Accepted Answer

The seller delivers goods ready for unloading at the named destination, with import duties the buyer's responsibility

Answer

Under DAP, the seller delivers the goods ready for unloading at the agreed destination place, bearing all freight and risk — but import customs clearance and duties are the buyer's responsibility.

Question 2

What is the key difference between CPT and CIP Incoterms for ocean shipments?

Accepted Answer

CIP requires the seller to provide all-risks (Institute Clause A) insurance; CPT does not require seller-paid insurance

Answer

Both CPT and CIP require the seller to pay for carriage to the destination, but CIP additionally requires the seller to obtain comprehensive (Clause A) cargo insurance for the buyer.

Question 3

Under FCA Incoterms, where does risk transfer when used at a named port/terminal?

Accepted Answer

When goods are delivered to the carrier at the named place and loaded onto the carrier's transport

Answer

Under FCA, risk transfers when the seller delivers goods to the named carrier or another nominated party at the agreed place — if at a container terminal, transfer occurs upon handover to the terminal.

Question 4

Which Incoterm requires the seller to deliver goods alongside the vessel at the named port of shipment?

Accepted Answer

FAS (Free Alongside Ship)

Answer

Under FAS, the seller fulfills their delivery obligation when goods are placed alongside the ship (on a quay or barge) at the named port, after which all costs and risks pass to the buyer.

Question 5

In a CIF transaction, what is the minimum insurance coverage the seller is required to provide?

Accepted Answer

Institute Cargo Clauses (C) — covering only major perils

Answer

Under CIF, the seller is only required to obtain minimum coverage under Institute Cargo Clauses (C), which covers major perils — buyers needing broader coverage should negotiate Clause A or specify in the contract.

Ocean Sea Freight Practice Test

Ocean Sea Freight Practice Test

Ocean Sea Freight Incoterms and Trade Terms 2