Session8 Review

There are four basic cost elements in transportation. Knowledge

of these costs enables a shipper to get a better price by selecting
the right shipping mode. The four basic costs are as follows:

 Line haul
 Pickup and delivery
 Terminal handling
 Billing and collecting
Line-haul costs
When goods are shipped, they are sent in a moving container that
has a weight and volume capacity. The carrier, private or for hire,
has basic costs to move this container, which exist whether the
container is full or not. For a truck, these include such items as
the driver’s wages and depreciation due to usage. These costs
vary with the distance travelled, not the weight carried. The carrier
has essentially the same basic costs whether the truck moves full
or empty. If it is half full, the basic costs must be spread over only
those goods in the truck.

The two groups for incoterms are:

In total, the Incoterms can be divided into two groups: Group I is
for each mode of transport (road, rail, air, and multimodal) This
group includes EXW, FCA, CPT, CIP, DAT, DAP, and DDP.
Group II is for transport by sea and inland waterways. This group
comprises FAS, FOB, CFR, and CIF.