Incoterms 2020 for CONCOR MT 2026
Incoterms 2020 for CONCOR MT 2026
CONCOR Management Trainee (Commercial & Operations) 2026 | Professional Knowledge | Topic 17 of 29
Incoterms, or International Commercial Terms, are among the most important concepts in international trade, export-import documentation, freight forwarding and multimodal logistics.
They clarify which party—the seller or buyer—is responsible for specified transportation arrangements, costs, export-import procedures, insurance obligations and the risk of loss or damage at different stages of a goods transaction.
For CONCOR Management Trainee aspirants, this topic is especially relevant because container freight may involve a manufacturer, a road transporter, an Inland Container Depot (ICD), a railway operator, a seaport and an international shipping company.
Suppose an Indian exporter agrees to sell machinery to a buyer in Germany under CIF Hamburg. Does that mean the exporter bears the risk until the cargo reaches Hamburg? No. Under CIF Incoterms 2020, the seller pays the specified freight and insurance costs to the destination port, but the risk generally transfers when the goods are on board the vessel at the port of shipment.
This difference between who pays and who bears the risk is one of the most important concepts in Incoterms.
In this chapter, we will cover all 11 Incoterms 2020 rules, seller and buyer responsibilities, delivery and risk-transfer points, FOB vs CFR vs CIF, FCA and container logistics, DAP vs DPU vs DDP, insurance requirements, numerical problems and 25 original exam-oriented MCQs.
1. What Are Incoterms?
Incoterms are standardized three-letter commercial trade terms published by the International Chamber of Commerce (ICC).
They explain how particular responsibilities are divided between the seller and buyer in a contract for the sale of goods.
Incoterms rules primarily clarify three matters:
- Obligations: Who arranges transportation, documentation, clearance and other specified activities?
- Costs: Who pays relevant freight, handling, insurance and other costs?
- Risks: At what delivery point does the risk of loss or damage pass from seller to buyer?
Simple Example
An exporter in India sells a container of textiles to a buyer in the United Kingdom.
The contract specifies:
CIF Felixstowe, Incoterms 2020
The seller must arrange and pay for the contracted maritime freight and required insurance to the named destination port.
However, risk transfers to the buyer at the shipment port when the goods are loaded on board the vessel.
Important Exam Point
Incoterms allocate specified obligations, risks and costs; they do not by themselves constitute the entire sale contract.
2. Who Publishes Incoterms?
The International Chamber of Commerce (ICC) publishes the Incoterms rules.
Important Facts
- First introduced: 1936
- Publisher: International Chamber of Commerce
- Current edition: Incoterms 2020
- Effective date: 1 January 2020
- Number of rules: 11
Important Clarification
The 2020 edition did not make earlier versions automatically invalid.
Parties may agree to an earlier edition, but they should identify it clearly in the contract.
Exam Point: Incoterms are developed by ICC, not the WTO, DGFT, RBI or CONCOR.
3. Why Are Incoterms Important?
Clarity in Responsibilities
They reduce disputes concerning who must arrange and pay for specified transportation stages.
Cost Allocation
They help identify which charges the seller or buyer should bear.
Risk Allocation
They establish an important delivery-risk transfer point.
Export–Import Coordination
They address relevant responsibilities for export and import clearance.
Insurance Planning
Certain rules require the seller to obtain cargo insurance.
Logistics Planning
They help businesses plan how goods will move from the seller to the buyer.
Commercial Quotations
Prices quoted under different Incoterms may include different transport and service components.
Exam Shortcut: Remember Responsibilities + Risk + Cost.
4. What Incoterms Do Not Cover
Incoterms do not automatically determine every element of an international sale.
They do not, by themselves, establish:
- Transfer of ownership or title.
- The complete payment terms.
- The method of payment.
- Product specifications.
- Remedies for contractual breach.
- The governing law of every dispute.
- All sanctions and export-control restrictions.
- Whether a contract of sale exists.
Example
A seller may have transferred cargo risk to the buyer under FOB, while ownership is transferred at a different point under the sale contract.
Important Exam Trap: Risk transfer and ownership transfer are not necessarily the same.
5. Classification of Incoterms 2020
There are 11 rules divided into two categories.
A. Rules for Any Mode or Modes of Transport
- EXW – Ex Works.
- FCA – Free Carrier.
- CPT – Carriage Paid To.
- CIP – Carriage and Insurance Paid To.
- DAP – Delivered at Place.
- DPU – Delivered at Place Unloaded.
- DDP – Delivered Duty Paid.
These rules can apply to road, rail, air, sea or suitable multimodal arrangements.
B. Rules for Sea and Inland Waterway Transport
- FAS – Free Alongside Ship.
- FOB – Free On Board.
- CFR – Cost and Freight.
- CIF – Cost, Insurance and Freight.
These four rules are intended for appropriate maritime and inland waterway shipments.
Most Important MCQ: Incoterms 2020 has 7 any-mode rules and 4 sea/inland-waterway rules.
6. EXW – Ex Works
Under EXW (Ex Works), the seller makes the goods available to the buyer at the named place, such as a factory or warehouse.
Seller's Main Responsibility
Make the goods available at the agreed place and time in accordance with the contract.
Buyer's Main Responsibilities
The buyer normally arranges and pays for the subsequent loading, transportation and relevant export/import clearance requirements.
The seller is not required under EXW itself to load the goods onto the buyer's collecting vehicle or complete export clearance.
Risk Transfer
Risk transfers when the goods are placed at the buyer's disposal at the named place in accordance with the EXW rule.
Example
EXW Factory, Lucknow, Incoterms 2020
The seller makes machinery available at the factory. The buyer arranges pickup and other required activities.
Important Caution
EXW may create practical difficulties when a foreign buyer cannot independently complete export formalities in the exporting country. FCA is often a more suitable rule for such circumstances.
Exam Point: EXW involves comparatively limited delivery obligations for the seller.
7. FCA – Free Carrier
Under FCA (Free Carrier), the seller delivers goods to the carrier or another party nominated by the buyer at the agreed place.
Seller's Responsibilities
- Prepare the goods.
- Complete relevant export clearance.
- Deliver the goods at the agreed FCA place.
- Load them if delivery occurs at the seller's premises under the rule.
Buyer's Responsibilities
- Arrange and pay for the main carriage under the applicable arrangement.
- Complete relevant import clearance.
- Bear risk after the agreed delivery point.
Important Delivery Difference
- FCA Seller's Premises: Seller delivers by loading goods onto the buyer's collecting means of transport.
- FCA Other Named Place: Seller delivers the goods on its arriving means of transport, ready for unloading and at the disposal of the nominated carrier or person under the rule.
Risk Transfer
Risk transfers when delivery is completed at the agreed FCA point.
Example
FCA ICD Tughlakabad, India, Incoterms 2020
The seller delivers the container under the specified FCA conditions at the named location.
CONCOR Connection
FCA can be appropriate for containerized shipments where a carrier takes over the container at an inland facility or terminal.
Exam Point: FCA is suitable for container and multimodal transportation.
8. CPT – Carriage Paid To
Under CPT, the seller arranges and pays for transportation to the named destination.
Important Distinction
Although the seller pays for transportation to the named destination, risk transfers when the goods are delivered to the carrier under the rule.
Where multiple carriers are used and no different delivery point is agreed, this is generally delivery to the first carrier.
Seller
- Completes export clearance.
- Delivers goods to the carrier.
- Arranges and pays for carriage to the named destination.
Buyer
- Bears risk after the applicable carrier-delivery point.
- Completes relevant import clearance.
- Arranges insurance if desired; CPT does not itself require the seller to insure the shipment.
Example
CPT Berlin, Germany, Incoterms 2020
The seller pays the contracted carriage to Berlin, but risk may transfer in India when the cargo is delivered to the first carrier.
Exam Trap: Freight payment to destination does not mean risk remains with the seller until destination.
9. CIP – Carriage and Insurance Paid To
CIP = Carriage and Insurance Paid To
CIP resembles CPT, but the seller must also arrange the prescribed cargo insurance.
Seller's Main Obligations
- Export clearance.
- Delivery to the carrier.
- Carriage payment to the named destination.
- Required insurance coverage.
Risk Transfer
Risk generally transfers when the seller delivers the goods to the carrier, or first carrier when applicable under the agreed arrangement.
Insurance
Under Incoterms 2020, CIP requires a higher default level of insurance cover consistent with Institute Cargo Clauses (A) or similar clauses, subject to the exact rule and agreed terms.
Example
CIP Munich, Germany, Incoterms 2020
The seller pays transportation and required insurance to Munich, while risk transfers at the earlier delivery point to the carrier.
Important Point
CIP can be used for multimodal container transport.
10. DAP – Delivered at Place
DAP = Delivered at Place
Under DAP, the seller delivers goods at the named destination on the arriving means of transport, ready for unloading.
Seller
- Arranges and pays for transportation to the agreed destination.
- Bears risk until the DAP delivery point.
- Completes export clearance where required.
Buyer
- Unloads the goods under the rule.
- Completes import clearance and pays applicable import duties and taxes.
Example
DAP Customer Warehouse, Hamburg, Incoterms 2020
The seller delivers the goods on the arriving vehicle, ready for unloading at the named destination.
Risk Transfer
Risk transfers when the goods are placed at the buyer's disposal, ready for unloading, at the agreed destination.
Exam Point: Under DAP, the seller does not have the general obligation to unload the goods.
11. DPU – Delivered at Place Unloaded
DPU = Delivered at Place Unloaded
Under DPU, the seller delivers goods at the named destination after unloading them from the arriving means of transport.
Seller
- Arranges carriage.
- Bears risk up to completed unloading at the destination.
- Unloads the goods under the delivery requirements.
Buyer
- Completes relevant import clearance.
- Pays applicable import duties and taxes.
Example
DPU Logistics Terminal, Rotterdam, Incoterms 2020
The seller arranges delivery and unloading at the specified terminal location.
DPU vs DAP
- DAP: Seller delivers ready for unloading.
- DPU: Seller delivers after unloading.
Important 2020 Change
Incoterms 2020 replaced the former DAT (Delivered at Terminal) term with DPU (Delivered at Place Unloaded).
DPU is not restricted to a terminal; it may apply to another agreed suitable location.
Exam Point: DPU is the only Incoterms 2020 rule that expressly requires the seller to unload the goods at the named destination as part of delivery.
12. DDP – Delivered Duty Paid
DDP = Delivered Duty Paid
Under DDP, the seller bears extensive delivery obligations.
Seller's Responsibilities
- Arrange carriage to the named destination.
- Complete export clearance.
- Complete import clearance under the applicable rule.
- Pay relevant import duties and taxes.
- Deliver goods at the named destination ready for unloading.
Buyer's Responsibility
The buyer generally unloads the goods under the rule.
Risk Transfer
Risk transfers when the goods are made available at the named destination, ready for unloading, in accordance with DDP.
Example
DDP Buyer Warehouse, London, Incoterms 2020
The seller takes responsibility for the agreed transportation and import clearance duties required by DDP.
Important Warning
DDP may be unsuitable where the foreign seller cannot legally or practically act as the importer or complete import clearance.
Exam Point: DDP gives the seller comparatively extensive delivery, clearance and cost obligations.
13. FAS – Free Alongside Ship
FAS = Free Alongside Ship
FAS is intended for sea or inland waterway transportation.
Seller
Delivers goods alongside the buyer-nominated vessel at the named port of shipment, in accordance with the rule, and completes applicable export clearance.
Buyer
Arranges and pays for the main sea carriage and handles subsequent obligations.
Risk Transfer
Risk transfers when goods are placed alongside the vessel under the specified conditions.
Example
FAS Mumbai Port, India, Incoterms 2020
Cargo is delivered alongside the designated vessel.
Important Difference
FAS involves delivery alongside the vessel, whereas FOB involves delivery on board the vessel.
14. FOB – Free On Board
FOB = Free On Board
FOB is intended for appropriate sea and inland waterway transport arrangements.
Seller's Responsibilities
- Prepare goods.
- Complete relevant export clearance.
- Deliver goods on board the buyer-nominated vessel at the named port of shipment.
Buyer's Responsibilities
- Arrange and pay for main carriage.
- Bear risk once goods are delivered on board.
- Complete import clearance and relevant destination obligations.
Example
FOB Chennai Port, India, Incoterms 2020
The seller completes delivery when the goods are on board the nominated vessel according to the rule.
Risk Transfer
Risk transfers when goods are on board the vessel at the shipment port.
Important Container Shipping Warning
For many container shipments, the seller hands the container to a carrier at a terminal before it is loaded aboard the vessel.
In such cases, FCA may be more appropriate than FOB because FCA can align the delivery-risk transfer with the actual terminal handover.
Exam Point: FOB risk transfers on board the vessel, not merely when goods enter a port gate.
15. CFR – Cost and Freight
CFR = Cost and Freight
CFR is restricted to sea and inland waterway transport.
Seller
- Delivers goods on board at the shipment port.
- Completes relevant export clearance.
- Arranges and pays freight to the named destination port.
Buyer
- Bears risk once goods are loaded on board at shipment.
- Handles import clearance.
- Arranges insurance if desired; CFR does not require the seller to obtain cargo insurance.
Example
CFR Hamburg Port, Germany, Incoterms 2020
The seller pays the agreed ocean freight to Hamburg.
However, risk transfers when cargo is on board at the originating shipment port.
Most Important Exam Trap
CFR = Seller pays freight to destination, but risk transfers at origin on board.
16. CIF – Cost, Insurance and Freight
CIF = Cost, Insurance and Freight
CIF is another sea or inland waterway rule.
Seller
- Delivers goods on board the vessel.
- Completes applicable export clearance.
- Arranges and pays for the ocean freight to the named destination port.
- Obtains the prescribed marine cargo insurance.
Buyer
- Bears risk after the goods are delivered on board at the shipment port.
- Completes import clearance.
- Bears applicable destination obligations under the rule.
Insurance Requirement
Incoterms 2020 generally requires default minimum cover consistent with Institute Cargo Clauses (C) or similar clauses, unless a different level is agreed.
Example
CIF Hamburg Port, Germany, Incoterms 2020
The seller pays the specified sea freight and insurance to Hamburg, but risk transfers at the shipment port when cargo is on board.
Exam Point: Insurance being paid by the seller does not mean the seller continues bearing cargo risk until Hamburg.
17. FOB vs CFR vs CIF
| Basis | FOB | CFR | CIF |
|---|---|---|---|
| Full form | Free On Board | Cost and Freight | Cost, Insurance and Freight |
| Modes | Sea/inland waterway | Sea/inland waterway | Sea/inland waterway |
| Main carriage paid by | Buyer | Seller | Seller |
| Seller required to buy cargo insurance? | No | No | Yes |
| Risk transfers | On board at shipment port | On board at shipment port | On board at shipment port |
| Import clearance | Buyer | Buyer | Buyer |
Golden Rule
Under FOB, CFR and CIF, risk transfers at the shipment port once the goods are on board the vessel.
The difference is principally in who must arrange and pay for carriage and insurance.
18. FCA vs FOB
This distinction is particularly important for container freight.
FCA
- Available for any mode.
- Suitable for delivery to a carrier at a terminal or other agreed location.
- Risk transfers at the FCA delivery point.
- Seller completes relevant export clearance.
FOB
- Restricted to sea/inland waterway transport.
- Risk transfers when goods are loaded on board the vessel.
- Intended for the appropriate maritime delivery model.
Example
A sealed export container is delivered to an inland terminal for onward movement by rail and sea.
FCA can better reflect the seller's actual handover obligations than a maritime FOB rule, depending on the contract.
Incoterms 2020 Update
FCA introduced an optional mechanism allowing the parties to agree that the buyer will instruct the carrier to issue an on-board Bill of Lading to the seller after vessel loading.
This can assist certain Letter of Credit arrangements.
19. CPT vs CIP vs CFR vs CIF
These rules can confuse students because they involve main carriage paid by the seller while risk may transfer much earlier.
| Rule | Transport modes | Seller pays carriage? | Seller arranges insurance? |
|---|---|---|---|
| CPT | Any mode | Yes | No mandatory obligation |
| CIP | Any mode | Yes | Yes |
| CFR | Sea/inland waterway | Yes | No mandatory obligation |
| CIF | Sea/inland waterway | Yes | Yes |
Important Risk Difference
For CPT/CIP, risk generally transfers upon delivery to the carrier at the agreed point.
For CFR/CIF, risk transfers on board the vessel at the shipment port.
Exam Point: C-terms can separate the destination to which the seller pays carriage from the earlier point where risk transfers.
20. DAP vs DPU vs DDP
| Basis | DAP | DPU | DDP |
|---|---|---|---|
| Full form | Delivered at Place | Delivered at Place Unloaded | Delivered Duty Paid |
| Seller arranges carriage to destination | Yes | Yes | Yes |
| Seller must unload as part of delivery | No | Yes | No |
| Import clearance generally handled by | Buyer | Buyer | Seller |
| Import duties generally paid by | Buyer | Buyer | Seller |
| Risk transfers | Ready for unloading at destination | After unloading at destination | Ready for unloading at destination |
Exam Memory Trick
- DAP = Arrived, ready to unload.
- DPU = Arrived and unloaded.
- DDP = Delivered with import duties/clearance handled by seller.
21. Insurance under CIF and CIP
Incoterms 2020 differentiates the default insurance requirements of CIF and CIP.
CIF
Default cover is generally consistent with Institute Cargo Clauses (C) or similar limited cover, unless the parties agree otherwise.
CIP
Requires a higher level of cover, generally consistent with Institute Cargo Clauses (A) or similar clauses.
Important Insurance Amount
Under the applicable CIF and CIP provisions, required insurance coverage is generally at least 110% of the contract price, in the contract currency, subject to the rule and agreed terms.
Example
- Contract Price = USD 50,000.
- Required insurance amount under the stated assumption: 50,000 × 110% = USD 55,000.
Important Distinction
Insurance coverage is not a guarantee that every loss will be paid. Exclusions, policy conditions and applicable claims requirements still matter.
22. Transfer of Risk vs Transfer of Cost
This is a fundamental Incoterms concept.
Transfer of Risk
The point at which the buyer begins to bear the specified risk of loss or damage.
Transfer of Cost
The allocation of expenses such as transportation, handling and insurance.
Example: CIF
The seller pays freight and required insurance to the destination port.
The buyer nevertheless bears cargo risk after on-board delivery at the port of shipment.
Conclusion
Cost responsibility and risk responsibility are not always transferred at the same point.
23. Incoterms and Customs Clearance
Export Clearance
Under most Incoterms rules, including FCA, CPT, CIP, DAP, DPU, DDP, FAS, FOB, CFR and CIF, the seller has the relevant export clearance responsibility.
EXW is the important exception, under which export clearance is ordinarily the buyer's obligation.
Import Clearance
The buyer generally handles import clearance except under DDP, where the seller undertakes that responsibility.
Important Caution
Legal restrictions can prevent a party from performing particular Customs activities. The chosen Incoterms rule should therefore be practical under the relevant country's laws.
24. Incoterms and Indian Export–Import Documentation
Incoterms may appear on:
- Export contracts.
- Commercial Invoices.
- Proforma Invoices.
- Freight quotations.
- Purchase orders.
- Letter of Credit documents.
Correct Contract Format
A clear contract entry includes:
Incoterms rule + precisely named place/port + Incoterms edition
Example
FCA ICD Tughlakabad, New Delhi, India – Incoterms 2020
Or:
CIF Port of Hamburg, Germany – Incoterms 2020
The name of the place or port is essential because Incoterms responsibilities depend on where delivery or the relevant carriage obligation occurs.
25. Incoterms and CONCOR Logistics
CONCOR's logistics operations connect factories, Inland Container Depots, rail terminals and ports.
Example: FCA Shipment
An Indian exporter arranges delivery of a container to an agreed inland terminal.
FCA can align delivery with handover to the buyer-nominated carrier at that location.
Example: FOB Shipment
The seller's FOB delivery obligation is linked to on-board delivery at a shipment port, not merely handing the container to the inland railway operator.
Example: CIP Shipment
The seller may contract for an integrated road–rail–sea movement and the required insurance to an agreed destination while risk transfers at the relevant earlier carrier-delivery point.
Commercial & Operations Relevance
CONCOR candidates should understand:
- Transport responsibility.
- Container terminal handover.
- Freight payment responsibilities.
- Shipment document coordination.
- Export-import Customs roles.
- Risk allocation between trading parties.
Important: CONCOR's operational obligations are governed by its actual contracts and service conditions, not automatically by the Incoterms selected between exporter and importer.
26. Numerical Formulas
FOB Value
In simplified textbook calculations:
FOB Value = Cost of Goods + Relevant Costs Included Up to On-Board Delivery
CFR Value
CFR = FOB + Ocean Freight
CIF Value
CIF = CFR + Marine Cargo Insurance Cost
Or:
CIF = FOB + Ocean Freight + Insurance Cost
Freight Calculation
Freight per Tonne = Total Freight Cost ÷ Cargo Weight in Tonnes
Insurance Cover
Required Cover in the stated example = Contract Price × 110%
Cost Increase Percentage
Cost Increase % = (New Cost − Old Cost) ÷ Old Cost × 100
Important: These are simplified examination formulas, not complete Customs valuation rules. Actual invoices, insurance premium calculations and contract terms may require more detail.
27. Solved Numerical Questions
Numerical 1 – CFR Calculation
FOB Value = USD 20,000.
Ocean Freight = USD 2,000.
CFR = 20,000 + 2,000.
Answer = USD 22,000.
Numerical 2 – CIF Calculation
FOB Value = USD 25,000.
Freight = USD 3,000.
Insurance Cost = USD 400.
CIF = 25,000 + 3,000 + 400.
Answer = USD 28,400.
Numerical 3 – Find FOB from CIF
CIF Value = USD 35,000.
Freight = USD 4,000.
Insurance = USD 500.
FOB = 35,000 − 4,000 − 500.
Answer = USD 30,500.
Numerical 4 – Insurance Coverage
CIF Contract Price = USD 40,000.
Required Cover = 40,000 × 110%.
Answer = USD 44,000.
Numerical 5 – Freight per Tonne
Freight = ₹60,000.
Cargo Weight = 20 tonnes.
Freight per Tonne = 60,000 ÷ 20.
Answer = ₹3,000 per tonne.
Numerical 6 – Cargo Transportation Cost
Road Transport = ₹12,000.
Rail Transport = ₹30,000.
Ocean Freight = ₹80,000.
Total Included Transport Cost = 12,000 + 30,000 + 80,000.
Answer = ₹1,22,000.
Numerical 7 – Cost Increase
Previous Cost = ₹5,00,000.
New Cost = ₹5,50,000.
Increase = 50,000 ÷ 5,00,000 × 100.
Answer = 10%.
28. Quick Revision
- Incoterms are published by ICC.
- ICC first published Incoterms in 1936.
- Incoterms 2020 came into effect on 1 January 2020.
- Incoterms 2020 has 11 rules.
- Seven rules can be used for any mode or combination of modes.
- Four rules are intended for sea and inland waterway transport.
- Incoterms deal with obligations, costs and risks.
- Incoterms do not automatically determine ownership transfer.
- EXW stands for Ex Works.
- FCA stands for Free Carrier.
- CPT stands for Carriage Paid To.
- CIP stands for Carriage and Insurance Paid To.
- DAP stands for Delivered at Place.
- DPU stands for Delivered at Place Unloaded.
- DDP stands for Delivered Duty Paid.
- FAS stands for Free Alongside Ship.
- FOB stands for Free On Board.
- CFR stands for Cost and Freight.
- CIF stands for Cost, Insurance and Freight.
- FCA is suitable for many containerized shipments.
- Under FOB, risk transfers when goods are on board at shipment.
- Under CFR, the seller pays freight to the destination port.
- Under CIF, the seller arranges required marine insurance.
- FOB, CFR and CIF share the on-board shipment risk-transfer point.
- CPT and CIP are available for multimodal transportation.
- CIP generally requires higher default insurance coverage than CIF.
- CIF defaults to Institute Cargo Clauses (C) or similar coverage.
- CIP defaults to Institute Cargo Clauses (A) or similar coverage.
- DAP delivery takes place ready for unloading.
- DPU requires seller unloading at destination.
- DDP requires seller import clearance and applicable duty responsibilities.
- DPU replaced DAT in Incoterms 2020.
- Under EXW, export clearance is generally the buyer's responsibility.
- Under most other rules, export clearance is the seller's responsibility.
- Incoterms should be specified with a named location and edition.
29. 25 Expected MCQs with Explanations
Q1. Which organization publishes Incoterms?
B. International Chamber of Commerce
C. World Bank
D. Reserve Bank of India
Correct Answer: B
Explanation: ICC develops and publishes Incoterms rules.
Q2. In which year were Incoterms first introduced?
B. 1936
C. 1947
D. 1995
Correct Answer: B
Explanation: ICC first introduced Incoterms in 1936.
Q3. How many rules are included in Incoterms 2020?
B. 10
C. 11
D. 13
Correct Answer: C
Explanation: Incoterms 2020 has eleven rules.
Q4. How many Incoterms 2020 rules are available for any mode of transport?
B. 5
C. 7
D. 11
Correct Answer: C
Explanation: Seven rules can be used with any mode or combination of modes.
Q5. Which Incoterms rule means Ex Works?
B. FCA
C. CPT
D. DDP
Correct Answer: A
Explanation: EXW stands for Ex Works.
Q6. Which rule is generally suitable for handing a container to a nominated carrier at an inland terminal?
B. FAS only
C. FOB only
D. CIF only
Correct Answer: A
Explanation: FCA supports delivery to the carrier at the relevant agreed place and is suitable for multimodal movement.
Q7. Under FOB Incoterms 2020, risk generally transfers when:
B. The goods reach the destination warehouse.
C. The goods are on board the vessel at the port of shipment.
D. The buyer makes the payment.
Correct Answer: C
Explanation: FOB delivery and risk transfer occur upon on-board delivery at the shipment port.
Q8. CFR stands for:
B. Cost and Freight
C. Customs Freight Regulation
D. Container Freight Rate
Correct Answer: B
Explanation: CFR means Cost and Freight.
Q9. Under CFR, who arranges and pays for main maritime carriage to the named destination port?
B. Buyer
C. Customs
D. Terminal operator in every case
Correct Answer: A
Explanation: The seller pays the contracted carriage to the named destination port.
Q10. Under CFR, when does cargo risk generally transfer?
B. After Customs import clearance.
C. When the goods are on board the vessel at shipment.
D. When insurance is purchased.
Correct Answer: C
Explanation: CFR risk transfers at the origin shipment port on board the vessel.
Q11. CIF stands for:
B. Cargo Import Fee
C. Container Insurance Framework
D. Commercial Inland Freight
Correct Answer: A
Explanation: CIF means Cost, Insurance and Freight.
Q12. Which of the following requires the seller to arrange insurance under the Incoterms rule?
B. CFR only
C. CIF and CIP
D. EXW and DAP
Correct Answer: C
Explanation: CIF and CIP impose insurance procurement obligations on the seller.
Q13. Under Incoterms 2020, which rule generally requires higher default cargo insurance coverage?
B. CIP
C. FOB
D. FAS
Correct Answer: B
Explanation: CIP generally requires Institute Cargo Clauses (A) or similar cover, while CIF defaults to Clause (C) or similar cover.
Q14. Which rule means Delivered at Place Unloaded?
B. DPU
C. DDP
D. CPT
Correct Answer: B
Explanation: DPU requires the seller to deliver after unloading.
Q15. Which Incoterms 2010 rule was renamed DPU in Incoterms 2020?
B. FOB
C. EXW
D. CIF
Correct Answer: A
Explanation: Delivered at Terminal (DAT) was renamed Delivered at Place Unloaded (DPU).
Q16. Under DAP, who generally performs unloading at the named destination?
B. Buyer
C. Export Customs
D. Railway operator in every case
Correct Answer: B
Explanation: The seller delivers ready for unloading; the buyer normally carries out unloading under the rule.
Q17. Which rule places the general import-clearance and import-duty responsibilities on the seller?
B. FCA
C. DDP
D. FOB
Correct Answer: C
Explanation: Delivered Duty Paid imposes these responsibilities on the seller.
Q18. Which Incoterms rule is limited to sea and inland waterway transport?
B. DAP
C. CPT
D. FOB
Correct Answer: D
Explanation: FOB is one of the four maritime/inland-waterway rules.
Q19. FOB value is USD 20,000 and freight is USD 3,000. CFR value under a simplified calculation is:
B. USD 20,000
C. USD 23,000
D. USD 25,000
Correct Answer: C
Explanation: CFR = FOB + Freight = USD 23,000.
Q20. FOB value is USD 30,000, freight is USD 4,000 and insurance cost is USD 500. CIF value is:
B. USD 33,500
C. USD 34,000
D. USD 34,500
Correct Answer: D
Explanation: CIF = 30,000 + 4,000 + 500 = USD 34,500.
Q21. The contract price is USD 50,000. Under a simplified 110% insurance-cover requirement, the insured amount is:
B. USD 52,500
C. USD 55,000
D. USD 60,000
Correct Answer: C
Explanation: 50,000 × 110% = USD 55,000.
Q22. Which statement about Incoterms is correct?
B. They replace all international trade regulations.
C. They allocate specified delivery obligations, risks and costs.
D. They guarantee payment by the importer.
Correct Answer: C
Explanation: Incoterms primarily address tasks, cost allocation and risk transfer.
Q23. Under FAS, delivery generally occurs when goods are:
B. Delivered to the buyer's final warehouse.
C. Cleared for import.
D. Unloaded at the destination port.
Correct Answer: A
Explanation: FAS means Free Alongside Ship.
Q24. Which is the correct allocation under CIF Incoterms 2020?
B. Buyer always pays ocean freight.
C. Seller bears risk until the buyer's warehouse.
D. Buyer must purchase the required CIF insurance.
Correct Answer: A
Explanation: CIF separates the seller's cost obligations from the earlier risk-transfer point.
Q25. Why are Incoterms relevant to CONCOR Commercial & Operations?
B. They clarify contractual transport responsibilities.
C. They help understand freight cost and risk allocation.
D. All of the above.
Correct Answer: D
Explanation: Incoterms are useful for understanding the commercial context of freight movements and responsibilities.
30. Frequently Asked Questions
What are Incoterms in simple words?
Incoterms are standardized commercial terms that explain how buyers and sellers divide specified delivery obligations, transportation costs and cargo risks.
How many Incoterms are there in 2020?
There are 11 Incoterms 2020 rules: seven for any mode of transportation and four for sea or inland waterway transportation.
What is the difference between FOB and CIF?
Under FOB, the buyer normally arranges and pays for the main sea carriage. Under CIF, the seller pays freight and required insurance to the destination port. Under both rules, risk transfers when goods are on board at shipment.
Does CIF mean the seller bears risk until delivery?
No. Under CIF Incoterms 2020, risk generally passes to the buyer when the goods are on board the vessel at the port of shipment.
What is the difference between CIF and CIP?
CIF is limited to sea/inland waterway transport and has a lower default insurance requirement. CIP works with any mode and generally requires a higher default level of insurance.
What is the difference between DAP and DPU?
Under DAP, goods are delivered ready for unloading. Under DPU, the seller unloads the goods as part of delivery.
What is the difference between DAP and DDP?
Under DAP, the buyer generally handles import clearance and duties. Under DDP, the seller is responsible for the relevant import clearance and duties.
Which Incoterm is suitable for container shipments?
FCA, CPT, CIP and other suitable any-mode rules can be appropriate depending on the actual handover and service arrangement. FCA is often preferred where the seller hands the container to a carrier before vessel loading.
Do Incoterms determine who owns the goods?
No. Ownership transfer must be addressed through the sale contract and applicable law.
Why should CONCOR MT candidates study Incoterms?
They help explain export-import transport responsibilities, container handover, freight arrangements, risk allocation and the commercial terms surrounding multimodal logistics.
Conclusion
Incoterms 2020 is an essential topic in international trade and logistics management because it clarifies the division of specified delivery responsibilities, transportation costs and cargo risk between buyers and sellers.
For CONCOR Management Trainee 2026 preparation, concentrate particularly on all 11 abbreviations, the 7+4 rule classification, FCA vs FOB, FOB vs CFR vs CIF, CPT vs CIP, DAP vs DPU vs DDP, marine insurance requirements and transfer-of-risk points.
The single most important lesson is that the party paying transportation expenses is not necessarily the party bearing cargo risk throughout that transportation.
Practise the numerical questions and 25 expected MCQs before moving on to Customs and Trade Operations.
Next Chapter: Customs & Customs Clearance – Complete Study Notes, Customs Act, Import–Export Assessment, Customs Brokers, ICEGATE, Examination, Warehousing and 25 Expected MCQs.
