| Course | MT433 Global Supply Chain Management |
|---|---|
| Unit | Unit 4 |
| Paper type | Trade terms analysis |
| Length | About 860 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT433 Unit 4
Who Books the Ship and Where Risk Leaves Karachi: An MT433 Unit 4 Trade Terms Analysis of Three Quotes
[Student Name]
Purdue University Global
MT433: Global Supply Chain Management
Unit 4 Trade Terms Analysis
[Instructor Name]
[Date]
Catawba Linen Supply, the mill and its three quotes are composite, as of one quote date; the trade terms follow the cited 2020 rules, and the sources cited are real.
The Three Quotes
Each quote covers one 40-foot container of 22,000 towels, under the Incoterms 2020 rules, with a named place in each case (International Chamber of Commerce, 2019).
FOB Karachi: $76,340. The mill delivers the goods on board the vessel the importer nominates at Karachi.
CFR Savannah: $81,400. The mill delivers on board at Karachi and pays ocean freight to Savannah.
DDP Charlotte: $108,647. The mill delivers to Catawba's warehouse dock, cleared for import, with all duties and fees paid.
Catawba's Own Cost of the Same Services
To judge the quotes, the analysis prices what Catawba would pay to perform each service itself. Ocean freight from Karachi to Savannah, through Catawba's forwarder, is $4,650 a box. Cargo insurance from Karachi, at 110 percent of the cost and freight value, is about $252. Duty at 9.1 percent of the free-on-board value is $6,947. The 2025 surcharge on Pakistani goods, at 19 percent of value on the quote date, is $14,505. The merchandise processing fee is $264 and the harbor maintenance fee $95. Trucking the box the last 250 miles inland costs $1,150.
Comparing the Quotes With the Cost Stack
FOB plus Catawba's own freight comes to $80,990. The CFR quote of $81,400 is $410 higher, a small premium for letting the mill book the ship. The mill's freight rate is slightly above Catawba's, and Catawba gives up the ability to choose the carrier and routing.
FOB plus every service Catawba would perform itself, freight, insurance, duty, surcharge, fees and drayage, totals $104,203. The DDP quote of $108,647 is $4,444 higher. Across fourteen containers a year, that is about $62,216, worth about four fifths of a container of towels at the mill price.
The delivered price looks simple because the mill has quietly priced every risk it is taking on, plus a margin.
Where Risk Moves
A timeline from the mill to the warehouse marks where each term moves risk from seller to buyer.
Under FOB Karachi, risk passes when the goods are on board the vessel at Karachi. Under CFR Savannah, risk also passes on board at Karachi, even though the mill pays freight to Savannah. This is the point most often misread: under CFR the seller pays for carriage beyond the point where risk has already passed, so if the container is damaged at sea, Catawba bears the loss and must claim on its own insurance. CFR does not require the seller to insure, which is why Catawba's own policy has to start at Karachi.
Under DDP Charlotte, risk passes only when the goods are ready for unloading at Catawba's dock, duty paid. The mill carries every risk until then, which is part of what the $4,444 buys.
None of the three terms transfers ownership. Incoterms rules allocate costs, risk and tasks between seller and buyer; when title passes is set by the sales contract.
Why Not DDP
Besides its cost, DDP raises a control problem. Under a delivered-duty-paid quote, the mill or its agent must act as importer of record, the party legally responsible for the entry's classification, value and duty (Entry of merchandise, 2024). Catawba would be relying on a foreign seller to classify its goods correctly and declare their value, while still facing the consequences if the merchandise is later found misdescribed. After the Unit 3 classification work, giving up that control would be a step backward.
Why FCA Rather Than FOB
FOB is designed for goods loaded over a ship's rail, such as bulk cargo. For containerized goods, the seller usually hands the container to the carrier at a terminal days before it is loaded, so under FOB the mill would remain at risk for a container it no longer controls. The ICC recommends FCA for containers for this reason. Under FCA Karachi container terminal, the mill delivers the loaded container to the carrier at the terminal, export cleared, and risk passes there. Incoterms 2020 also lets the parties agree that the buyer will instruct its carrier to issue an on-board bill of lading to the seller, which the mill's bank may require under a letter of credit.
The price should be the same as FOB or slightly lower, since the mill no longer pays terminal loading charges.
Recommendation
Catawba should buy on FCA Karachi container terminal, Incoterms 2020, book its own ocean freight through its forwarder, insure from the terminal, and act as importer of record itself. Chopra and Meindl (2019) describe transportation and sourcing decisions as trade-offs between cost and control; here the cheaper choice and the more controlled one are the same. The CFR quote is an acceptable fallback for a single container if Catawba's forwarder cannot secure space, and the DDP quote should be declined.
References
Chopra, S., & Meindl, P. (2019). Supply chain management: Strategy, planning, and operation (7th ed.). Pearson.
Entry of merchandise, 19 U.S.C. ยง 1484 (2024).
International Chamber of Commerce. (2019). Incoterms 2020: ICC rules for the use of domestic and international trade terms (ICC Publication No. 723E).
What the MT433 Unit 4 assignment asks for
Unit 4 asks students to compare quotes on different trade terms and recommend the term the buyer should use. Instructors expect each rule named with its place and edition, such as FOB Karachi, Incoterms 2020. The buyer's own cost of performing each service, freight, insurance, duty, fees and inland transport, should be priced so each quote can be judged against it. The analysis must say where risk passes under each term, which often differs from where the seller's payment for freight ends. Incoterms rules allocate costs, risks and tasks; they do not transfer ownership, which the sales contract governs. A delivered-duty quote should be tested against doing the work in-house, including who would act as importer of record. For container cargo, the choice between FOB and FCA deserves explanation.
Inside the MT433 Unit 4 example
The sample states the three quotes with their named places. A cost stack prices every service the importer would otherwise buy. Each quote is compared with the stack, showing the small CFR premium and the large DDP premium, under a highlighted line on what the delivered price has quietly priced in. A risk section walks along the timeline, explaining why CFR risk passes at Karachi though the seller pays freight to Savannah, and notes that none of the terms moves title. A section on DDP adds the importer-of-record problem, citing the entry statute. A section explains why FCA suits containers better than FOB, with the on-board bill of lading option. The recommendation names FCA, with CFR as a single-container fallback.
Where the points sit in the MT433 Unit 4 rubric
Trade terms analyses usually earn their marks on precision about points. Naming a rule without its named place and edition is a frequent first deduction. Graders commonly probe CFR and CIF, where the seller pays freight beyond the point at which risk has already passed; papers stating that risk travels with the freight payment misread the rule. Treating Incoterms as though they transfer ownership draws comment. A delivered-duty quote accepted for convenience, with no comparison against in-house costs, forfeits analysis credit. Recognizing why FCA suits container cargo shows current practice. Considering who acts as importer of record shows compliance awareness. A comparison table with identical rows for each quote and a timeline of risk transfer make the argument easy to check.
MT433 Unit 4 help: mistakes that cost points
The most frequent weak analysis describes each Incoterm from a textbook list and never prices the quotes. Another common error says the buyer takes risk at the destination port under CFR because the seller paid freight there. Students often write FOB for container shipments without considering when the seller loses control of the box. Some treat a DDP quote as cheaper because it has no separate duty line. Title and risk are frequently confused. Before submitting, mark on a single line from mill to warehouse the point where risk passes under each term in your paper, and check that your insurance starts at that point. If your insurance starts later than your risk, your client is uninsured for part of the trip.
Get an MT433 Unit 4 example written to your instructions
Paste the quotes or the case exhibit for your Unit 4 analysis, with named places, prices, payment terms and the rubric. We write a first sample free, returned in 24-48h, that prices each term against the buyer's own costs, marks where risk passes and names the Incoterms edition throughout. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More MT433 papers and BS in Business Administration samples
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- MT433 Unit 8: Nearshoring Proposal
- MT433 Unit 9: Trade Compliance Review
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MT433 Unit 4 questions, answered
Why is CFR riskier for a buyer than it looks?
Because the seller pays freight to the destination port while risk passes to the buyer at the port of loading, once the goods are on board. A loss at sea is therefore the buyer's, on a ship the seller chose. CFR also obliges nobody to insure, so a buyer relying on the seller's freight arrangement may be carrying an uninsured cargo without knowing it.
Can a foreign seller act as importer of record under DDP?
It can, but it takes arrangements many overseas mills lack. A non-resident importer of record generally needs a customs bond and a resident agent in the United States for service of process, and it declares classification and value on goods the buyer will sell. Many buyers prefer to control those declarations, which is one reason the example sets DDP aside.
Do Incoterms decide when the buyer pays?
No. Incoterms allocate delivery, costs, risk and customs duties between seller and buyer, while title, payment timing and remedies for defects belong to the sales contract. A buyer who picks DDP expecting to pay on delivery needs that written into the contract separately, which is exactly the confusion the mill's letter created in the example.
Where can I find a free MT433 Unit 4 sample paper?
This page carries the complete MT433 Unit 4 analysis, comparing FOB, CFR and DDP quotes for a container of towels and recommending FCA.
Why does risk pass at Karachi under CFR in the MT433 Unit 4 sample?
Under CFR the seller pays freight to Savannah, but risk passes once the goods are on board at Karachi, so the importer must insure the ocean leg.