Certified Supply Chain Professional (CSCP) Practice Exam

Which shipping term signifies that the seller pays for main carriage and insurance?

1. Cost, Insurance, and Freight

2. Delivered Duty Paid

3. Delivered at Place

4. Free on Board

The correct answer is: Cost, Insurance, and Freight

The correct choice signifies that the seller is responsible for the costs associated with the main carriage of goods as well as the insurance during transit. This term outlines a clear agreement wherein the seller handles the logistics and associated risks until the goods reach the destination port. In practice, when a seller uses this shipping term, it provides assurance to the buyer that they will not incur unexpected costs related to damage or loss during shipping, as the seller must provide insurance for the cargo. This arrangement often makes it easier for buyers to understand their total costs and the level of risk they are assuming upon the receipt of goods. The other terms mentioned pertain to different responsibilities and costs associated with shipping. For instance, "Delivered Duty Paid" implies that the seller not only covers the main carriage but also all associated taxes and duties, signaling a different level of responsibility. "Delivered at Place" suggests that the seller is responsible until the goods arrive at a specified location but does not explicitly include insurance. "Free on Board" specifies that the seller's responsibility ends once the goods are loaded onto the shipping vessel, transferring the risk and costs to the buyer at that point, which does not include insurance provisions for the journey.