INCOTERMS – Example 1:

The Brno advertising company won a tender for the supply of gift items for the winter
promotional event (teddy bears) for firm ANIMALS, ltd., which is already a traditional
production. The advertising company must assess the suitability of the supplier and the
delivery terms for this production. The production of plush teddy bears takes place in China
and the company regularly addresses three main suppliers such as A, B and C. The head of the
purchasing department has set the basic criteria and their weight, which will be decisive for
the selection of the contractor for this year's order, namely: quality, price and reliability. The
following information is provided in Table 1:
Table 1: Evaluation criteria and suppliers
Supplier
Evaluation criteria A B C
1. Quality (weight 35)
The number of flawless deliveries from 50 [pcs] 38 44 36
Share
Share x weight
2. Price (weight 40)
Average price for 30 deliveries [CZK] 12 16 13
Reciprocal index
Index x weight
3. Reliability (weight 25)
Exceeding delivery times for 50 deliveries [days] 124 137 192
Reciprocal index
Index x weight
Total evaluation
Ranking

Once the most suitable supplier is selected, it is necessary to agree on the specific delivery
terms according to INCOTERMS 2010 from Table 2.

Table 2:
Supplier (price in USD)
Delivery Terms A B C
EXW 18 950 25 263 20 526
FAS Shanghai 19 200 25 553 20 651
FOB Shanghai 19 270 25 613 20 731
DAT Trieste 21 598 27 193 22 531
DAP Brno 22 958 28 345 23 683

The products will be packed in 30 boxes of 1 CBM. And the boxes then into one container. The
best route is a shipment from the factory along the road to Shanghai, then by boat to Trieste.
Then, for transport from Trieste to Brno, road freight transport. The task is to select the best
supplier and the most cost-effective delivery condition and determine the cost of the
procurement under this delivery condition. Express your results in USD. Exchange rates: 21.7
CZK/USD and 27.5 CZK/EUR. You also have this information:
 The price for shipment per one container by truck from the factory to the port of Shanghai
is for: A: 200 USD, B: 300 USD, C: 120 USD
 Shipping cost for boat from Shanghai to Trieste: 1 400 USD
 Loading in Shanghai: 55 USD per container
 Transhipment (reloading) in Trieste 60 EUR per container (landing 30 EUR, loading 30 EUR)
 The price of transport from Trieste to Brno by truck: 23 000 CZK
 Insurance fee from the factory to the port: 60 USD, Shanghai – Brno: 998 USD, Shanghai
– Trieste: 790 USD

Example 2
Calculate all the costs for purchase of goods including carriage, insurance, and other necessary
costs when you have this delivery term: EUR 55 670 FAS Boston INCOTERMS 2010. The
supplier’s factory is located nearby Boston and the buyer needs goods at his warehouse in
Poznan (city in Poland). The transport will be performing by a vessel from Boston to Gdansk
(the port in Poland) and then by railway. All charges are in EUR:

Carriage from factory of supplier to port Boston 450

Carriage from Gdansk to Poznan 2 640
Carriage ship Boston – Gdansk 10 750
Shipment in Boston 290
Reloading (transhipment) in Gdansk 80
Export license 50
Insurance Boston – Gdansk 1 265
Insurance Gdansk – Poznan 450
Insurance Boston – Poznan 1 625
Import duty to Poland 1 000
Example 3
Your firm in Vienna is dealing with delivery of 5 pallets of sardines from a supplier nearby
Saint-Petersburg. The delivery route is to Saint-Petersburg, then to the port Gdansk by a ship
and then to Vienna by road. Decide which type of delivery terms is the most efficient (the
cheapest) for you: EUR 10 200 EXW INCOTERMS 2010, EUR 10 900 FOB Saint-Petersburg
INCOTERMS 2010, EUR 14 900 DAP Gdansk INCOTERMS 2010. The following information is
provided:

Transport to the port (Saint-Petersburg) 380 USD

Shipment (per 1 pallet) 60 USD
Export charges 400 USD
Transport by vessel to Gdansk (total) 6 000 USD
Discharge (landing) in Gdansk (per 1 pallet) 30 EUR
Loading of the goods onto truck (per 1 pallet) 15 EUR
Transport of the goods Gdansk – Vienna 900 EUR
Notice: The results should be in EUR; use this exchange rate – USD / EUR 1.317

Example 4
The Czech company XY in Brno deals with delivery of spare parts from a Chinese factory in
Singapore. This supplier could deliver the goods with using the one of the following variants
of INCOTERMS 2010: USD 100 000 EXW factory, USD 101 990 FOB Singapore, USD 115 600
DAT Trieste, USD 127 700 DDP duty-free warehouse Decin. The goods will be packed to the 7
containers and the best route is transport by trucks to Singapore, then by ship to Trieste. In
the case of transport from Trieste to Brno it is possible use rail or road. Your task is
determination of the best delivery term and to calculate all purchasing costs for this condition.
You already know that:

 Transport by trucks from factory to the port Singapore costs 300 USD per 1 container.
 Transport by ship Singapore – Trieste 13 100 USD.
 Shipment (loading) in Singapore 50 USD per 1 container.
 Reloading (transhipment) in Trieste 90 EUR per 1 container (landing or discharging 45 EUR,
loading 45 EUR).
 Transport by railway for the all containers: 91 200 CZK from Trieste to Decin and 20 900
CZK from Decin to Brno.

 Transport by road: 24 000 CZK for truck with the trailer and 20 500 CZK for truck without
the trailer from Trieste to Decin; 4 950 CZK possibly 3 500 CZK from Decin to Brno. Each
truck or trailer is suitable only for 1 container.

 Insurance for factory – port Singapore costs 500 USD, port Singapore – Brno costs 10 000
USD, Trieste – Brno costs 2 500 EUR, Decin – Brno 22 900 CZK.

 Import duty: 500 EUR.

Notice: The results should be in CZK; use these exchange rates – CZK/USD: 18.7; CZK/EUR: 24.8