What are Incoterms 2020?

Incoterms 2020 are international trade rules published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international transactions.

Why are Incoterms important for importers and exporters?

Incoterms help importers and exporters understand who is responsible for shipping, insurance, customs duties, and risk transfer, reducing confusion and legal disputes.

What is the difference between FOB and CIF?

FOB (Free on Board) means the buyer takes responsibility once the goods are loaded on the ship. CIF (Cost, Insurance, and Freight) means the seller covers those costs until the goods arrive at the destination port.

What does DDP mean in Incoterms?

DDP (Delivered Duty Paid) means the seller is responsible for delivering the goods to the buyer's location, including paying for all duties, taxes, and customs clearance.

Are Incoterms 2020 legally binding?

Incoterms are not laws but internationally recognized standard terms. They become binding only when both parties agree to use them in a contract.

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Fifty important multiple choice questions (MCQs) on Incoterms (International Commercial Terms), suitable for learning or quiz practice

Multiple Choice Questions (MCQs) on Incoterms

1. What does “Incoterms” stand for?
A. International Commercial Terms
B. International Company Terms
C. Internal Commercial Transactions
D. International Contract Templates
Correct: A

2. Who publishes Incoterms?
A. WTO
B. ICC
C. IMF
D. WCO
Correct: B

3. Which Incoterm gives maximum responsibility to the buyer?
A. CIF
B. FOB
C. EXW
D. DDP
Correct: C

4. Which Incoterm gives maximum responsibility to the seller?
A. EXW
B. DDP
C. CIF
D. FOB
Correct: B

5. In CIF, who pays for insurance?
A. Buyer
B. Seller
C. Shared
D. Carrier
Correct: B

6. In EXW, where is delivery considered complete?
A. At buyer’s warehouse
B. At customs
C. At seller’s premises
D. At port of origin
Correct: C

7. Which Incoterm replaced DAT in Incoterms 2020?
A. DPU
B. DDP
C. FCA
D. CIP
Correct: A

8. What is the main mode of transport for FOB?
A. Air
B. Rail
C. Road
D. Sea
Correct: D

9. Under DDP, who pays import duties?
A. Seller
B. Buyer
C. Carrier
D. Customs broker
Correct: A

10. Under FCA, who arranges export clearance?
A. Buyer
B. Seller
C. Both
D. Carrier
Correct: B

11. Which Incoterm is most suitable for containerized goods handed over at a terminal?
A. FOB
B. FAS
C. FCA
D. EXW
Correct: C

12. What does DPU stand for?
A. Delivered at Port Unloaded
B. Delivery Payment Unloaded
C. Delivered at Place Unloaded
D. Duties Paid Unloaded
Correct: C

13. In which Incoterm does the seller bear all risks and costs up to destination, including duties?
A. DDP
B. DPU
C. CFR
D. FCA
Correct: A

14. Which Incoterm requires the seller to unload the goods at destination?
A. DDP
B. DPU
C. DAP
D. CIF
Correct: B

15. Which term applies to sea transport where the seller delivers goods alongside the vessel?
A. FOB
B. FAS
C. CFR
D. CPT
Correct: B

16. Under CIP, who pays for insurance?
A. Buyer
B. Seller
C. Shared
D. Customs
Correct: B

17. Which Incoterm should not be used for containerized shipments?
A. FOB
B. FCA
C. CIP
D. DAP
Correct: A

18. What type of insurance must the seller provide under CIF?
A. Institute Cargo Clauses A (All Risk)
B. Institute Cargo Clauses C (Minimum)
C. No insurance required
D. Full coverage including delay
Correct: B

19. What Incoterm means the seller is only responsible up to placing goods on board the ship?
A. FOB
B. CIF
C. CPT
D. DAP
Correct: A

20. What is the latest version of Incoterms as of 2020?
A. Incoterms 2015
B. Incoterms 2010
C. Incoterms 2020
D. Incoterms 2022
Correct: C

21. Which Incoterm allows use of the seller’s own transport for delivery?
A. FCA
B. CIF
C. EXW
D. FOB
Correct: A

22. In DAP, who is responsible for unloading the goods?
A. Seller
B. Buyer
C. Carrier
D. Customs
Correct: B

23. Which Incoterm is best for multimodal transport with seller responsible to named place?
A. CFR
B. CIP
C. FOB
D. FAS
Correct: B

24. Under which Incoterm is risk transferred at the port of loading onto the vessel?
A. FOB
B. DDP
C. EXW
D. FCA
Correct: A

25. Which of the following is NOT a Group D Incoterm?
A. DPU
B. DDP
C. DAP
D. CPT
Correct: D

26. What document is crucial in CIF contracts?
A. Waybill
B. Insurance certificate
C. Export license
D. Delivery note
Correct: B

27. Which Incoterm applies only to non-container sea shipments?
A. CIP
B. FOB
C. FCA
D. DPU
Correct: B

28. In EXW, who bears the cost of loading the goods at the seller’s premises?
A. Seller
B. Buyer
C. Split equally
D. Freight forwarder
Correct: B

29. Under which Incoterm is the seller obligated to assist in obtaining a bill of lading if requested?
A. FCA (with onboard B/L clause)
B. EXW
C. DPU
D. DDP
Correct: A

30. Which Incoterm best suits e-commerce cross-border shipments?
A. FOB
B. DDP
C. CIP
D. EXW
Correct: B

31. Under which Incoterm is the buyer responsible for export formalities?
A. EXW
B. CIF
C. CPT
D. CIP
Correct: A

32. Under which term does risk transfer before main carriage?
A. CIF
B. DAP
C. FCA
D. DDP
Correct: C

33. Which Incoterm requires the buyer to unload the goods at destination?
A. DPU
B. DAP
C. DDP
D. EXW
Correct: B

34. What does CIF stand for?
A. Carrier, Insurance & Freight
B. Cost, Insurance & Freight
C. Cost, Import & Freight
D. Cargo, Insurance & Freight
Correct: B

35. In DDP, which party handles customs clearance and taxes?
A. Seller
B. Buyer
C. Forwarder
D. Port authority
Correct: A

36. Which Incoterm puts minimum obligation on seller?
A. DPU
B. FCA
C. EXW
D. FOB
Correct: C

37. What is the key difference between DAP and DPU?
A. DAP includes unloading, DPU does not
B. DPU includes unloading, DAP does not
C. Both are the same
D. DAP includes customs clearance
Correct: B

38. Which Incoterm is suitable when delivery must be done inside buyer’s country and include tax and duty?
A. CIP
B. DDP
C. FOB
D. FAS
Correct: B

39. Under CPT, who contracts the carriage?
A. Buyer
B. Seller
C. Insurance company
D. Customs
Correct: B

40. Under CIF, when does the risk transfer to buyer?
A. At port of destination
B. After unloading
C. Once goods are on board ship
D. After customs clearance
Correct: C

41. Which Incoterm obligates the seller to clear goods for export?
A. EXW
B. FCA
C. FOB
D. All except EXW
Correct: D

42. Which term offers the least obligation for the seller regarding transport?
A. CIP
B. DAP
C. EXW
D. DDP
Correct: C

43. Which Incoterm does NOT include insurance obligation for the seller?
A. CIP
B. CIF
C. CFR
D. None
Correct: C

44. What is required in CIP that is not in CPT?
A. Export clearance
B. Import duty
C. Insurance
D. Risk transfer
Correct: C

45. Which Incoterm is most suitable for bulk cargo shipped by sea?
A. FOB
B. CIP
C. DDP
D. FCA
Correct: A

46. What’s a disadvantage of using EXW for buyers?
A. Control over logistics
B. Cost transparency
C. Responsibility for all transport
D. Seller handles customs
Correct: C

47. In which Incoterm does the seller deliver when goods are placed at the disposal of the buyer, not loaded?
A. EXW
B. DPU
C. FCA
D. FOB
Correct: A

48. In CPT, does the seller bear the risk until the goods reach the buyer?
A. Yes
B. No
C. Only for air transport
D. Only if insured
Correct: B

49. Who is responsible for unloading in DPU?
A. Seller
B. Buyer
C. Carrier
D. Forwarder
Correct: A

50. What Incoterm is best when seller wants to control the entire delivery process?
A. CIF
B. EXW
C. DDP
D. FOB
Correct: C

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Geopolitical Interference in the Matarbari Deep-Sea Port Development

Geopolitical Interference in the Matarbari Deep-Sea Port Development.

The Matarbari Deep-Sea Port in Bangladesh is more than just a regional trade hub—it is a point of interest for multiple countries and their strategic interests. Given its significance in regional trade and logistics, various powers have shown interest in influencing the development, either directly or indirectly, through economic investments, political influence, or infrastructure projects.

photo credit : https://thefinancialexpress.com.bd/views/views/an-infrastructural-marvel-taping-shape

1. Strategic Location in the Bay of Bengal

Proximity to Major Trade Routes: The Matarbari Port is located along key sea lanes in the Bay of Bengal, connecting to the Indian Ocean. This makes it vital for shipping traffic and trade routes.

Access to Landlocked Countries: Matarbari offers easier access to landlocked countries like Nepal and Bhutan by providing them an alternative port, thus strengthening Bangladesh's economic position in South Asia.

2. Japan’s Influence (Economic Diplomacy)

Japan's Investment & Support: Japan has invested in Matarbari Port’s development through JICA (Japan International Cooperation Agency). This is part of Japan’s broader strategy to enhance its influence in Southeast Asia and South Asia.

Strategic Objective: Japan has a strong interest in ensuring the free flow of trade in the Indo-Pacific region. It views ports like Matarbari as critical to countering Chinese dominance in the region, particularly with China’s Belt and Road Initiative (BRI).

Access to Resources & Trade Routes: Japan also seeks a secure route for its goods, especially energy imports, which rely on smooth operations in the Bay of Bengal and the Strait of Malacca.

3. China’s Geostrategic Interests

Belt and Road Initiative (BRI): China’s Belt and Road Initiative (BRI), a flagship project for global infrastructure connectivity, has investments across South Asia, including in ports like Payra and Chattogram in Bangladesh. However, China is also a competitor in regional maritime influence.

Competition with Japan: As China increases its footprint in South Asia, Matarbari’s deep-sea capabilities could reduce China’s influence over other Bangladesh ports. This could indirectly limit the reach of Chinese goods and supplies through Bangladesh.

China-Bangladesh Relations: While China has been a strategic partner, it doesn’t have direct investments in Matarbari yet, but it keeps a close watch on these developments in order to safeguard its interests in the region.

4. India’s Concerns

Regional Rivalry: India, Bangladesh’s neighbor, is deeply invested in maintaining strong economic and political ties with Dhaka but has concerns over China’s growing influence in the region. India is wary of any developments that might tilt the region more toward Chinese economic and military power.

Connectivity & Trade Routes: Matarbari, with its strategic location, offers an alternative route to Indian ports. India has a vested interest in ensuring that no foreign country or power significantly outweighs India’s role in the region.

Political Balance: India may also exert subtle pressure on Bangladesh to align its strategic partnerships to maintain the political balance in the Bay of Bengal. This includes working with Bangladesh on shared security concerns, such as combating piracy or ensuring free maritime trade routes.

5. U.S. and Western Influence

Indo-Pacific Strategy: The United States, through its Indo-Pacific Strategy, is heavily invested in the economic growth of the Bay of Bengal and aims to foster closer relations with countries like Bangladesh. It sees ports like Matarbari as part of the broader “free and open Indo-Pacific” initiative.

Investment in Infrastructure: While the U.S. hasn’t heavily invested in Matarbari, there is a potential for future engagement in terms of trade agreements, infrastructure financing, and capacity building for port security and logistics.

Security Concerns: The U.S. is also concerned with China’s growing military influence in the Indian Ocean and sees Bangladesh as a key partner in ensuring regional stability.

6. Bangladesh’s Position

Strategic Autonomy: Bangladesh is focused on maintaining a neutral stance while maximizing economic and strategic gains. It is balancing its relations between major powers—like India, China, Japan, and the U.S.—to avoid being overly reliant on any one country.

Diversification of Trade: Matarbari port, which will handle large ships and increase Bangladesh’s cargo capacity, is critical for economic diversification. Bangladesh is investing in multiple ports to avoid over-dependence on any single port (such as Chattogram, which is already congested).

7. Regional and Global Implications

Access to the Indian Ocean: A deep-sea port like Matarbari improves Bangladesh’s maritime access to global shipping lanes, further increasing its geopolitical leverage in the region.

Potential for Naval Presence: Given its importance, Matarbari could also be an area of strategic military importance in the future, particularly as countries like China and India maintain naval assets in the Indian Ocean for trade and defense.

Conclusion: The Geopolitical Dance

The Matarbari Deep-Sea Port stands at the crossroads of geopolitical competition between major powers like India, China, and Japan, each with its interests in regional trade routes, security, and economic influence. Bangladesh, in its strategic calculations, has the opportunity to leverage these interests for its own development while maintaining a delicate balance to preserve its sovereignty and economic growth.

Incoterms 2020 Explained: Your Easy Guide to International Trade Terms

If you’re new to international trade or even just looking to brush up on your shipping knowledge, you’ve probably heard about Incoterms. But what exactly are Incoterms 2020, and why do they matter for your business? In this easy guide, we’ll break down everything you need to know about these essential shipping terms and how they help buyers and sellers worldwide.

What Are Incoterms?

Simply put, Incoterms are a set of international rules that explain the responsibilities of buyers and sellers during the shipment of goods. Created by the International Chamber of Commerce (ICC), these international trade terms define who pays for shipping, who handles insurance, and at what point the risk transfers from seller to buyer.

Think of Incoterms as a universal language that clears up confusion in global trade — so your shipments go smoothly and without surprises.

Why Are Incoterms 2020 Important?

The latest version, Incoterms 2020, came into effect in January 2020 and brought some important updates to make international shipping even clearer. Whether you’re an importer, exporter, or freight forwarder, understanding these rules is key to avoiding costly mistakes.

Some highlights include:

DPU (Delivered at Place Unloaded) replaced the old DAT (Delivered at Terminal) term, making it clear delivery can happen anywhere, not just a terminal.
Sellers now have new responsibilities under FCA (Free Carrier) when it comes to documents like bills of lading, especially useful for shipments using letters of credit.
Increased insurance requirements under CIP (Carriage and Insurance Paid To) to better protect buyers.
Clearer rules on security obligations during transport and customs clearance.

Common Incoterms You Should Know

Here are a few of the most common Incoterms you’ll see in contracts:

EXW (Ex Works): The seller makes the goods available, and the buyer handles the rest, including shipping and customs.
FOB (Free On Board): The seller loads the goods onto the ship, and the buyer takes over from there.
CIF (Cost, Insurance, and Freight): The seller pays for shipping and insurance to the port of destination.
DAP (Delivered At Place): The seller delivers the goods to the buyer’s location, but unloading is the buyer’s responsibility.
DDP (Delivered Duty Paid): The seller takes care of everything — shipping, duties, and unloading.

How to Choose the Right Incoterm for Your Shipment

Choosing the right Incoterms depends on your specific trade needs:

What kind of transportation will you use? (Sea, air, road, or multimodal)
Who will handle customs and insurance?
How much control or risk are you comfortable taking on?

Final Tips: Mastering Incoterms for Smooth Shipping

Mastering Incoterms 2020 will help you avoid misunderstandings and keep your international shipments on track. Always specify the exact Incoterm in your sales agreements — and if you’re unsure, consult with your logistics provider or trade expert.

Incoterm	Who Pays Freight?	Who Arranges Insurance?	Risk Transfer Point
EXW	Buyer	Buyer	Seller’s Factory
FOB	Buyer	Buyer	At Port (on ship)
CFR	Seller	Buyer	On Ship
CIF	Seller	Seller	On Ship
DDP	Seller	Seller	Buyer's Address

Incoterm	Who Pays Freight?	Who Arranges Insurance?	Risk Transfer Point
EXW	Buyer	Buyer	Seller’s Factory
FOB	Buyer	Buyer	At Port (on ship)
CFR	Seller	Buyer	On Ship
CIF	Seller	Seller	On Ship
DDP	Seller	Seller	Buyer's Address

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