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How Much do you Know about the FOB Price

How much do you know about the FOB price? What should I do if I’m worried about releasing the goods without a bill of lading?

(FOB) FOB, also known as “free on board”, abbreviated as FOB, is one of the trade terms commonly used in international trade. It refers to the sales price in which the transportation costs and insurance costs from the port of departure to the destination are borne by the buyer and are not included in the settlement price. Since the freight forwarder designated by the customer will charge a higher fee than our own freight forwarder, we must pay special attention when quoting the customer, otherwise this is the point of our profit reduction. When we quote the FOB price to the customer, the price composition we quote to the customer is: domestic freight + local port miscellaneous charges + cost price of goods.

We must not record FOB as EXW to calculate the cost, otherwise we will lose a part of the cost, and maybe that part of the cost is our own profit. After we have negotiated the trade terms with the customer, we will ask the customer to specify the freight forwarding information to check with them the local port miscellaneous charges for this batch of shipments, and make the most accurate quotation. gone.

And FOB customers must specify the freight forwarder! What should I do if I am worried about releasing the goods without a bill of lading?

How did the delivery without a bill of lading come about?

FOB means that the buyer appoints the carrier (usually a foreign forwarder and its agent in China), and the buyer controls the transportation; the forwarder often obeys the buyer, or is even directly controlled by the buyer; delivery without a bill of lading usually occurs in this situation Down! This kind of trade usually produces two sets of bills of lading: the owner’s bill and the freight forwarder’s bill. The freight forwarder uses itself (or its agent) as the shipper to book the space with the shipping company and obtain the shipowner’s bill; the domestic exporter gets the bill of lading issued by the freight forwarder (or even can’t get the bill of lading), and the consignor and consignee usually show are sellers and buyers. After the freight forwarder obtains the shipowner’s order from the shipping company, it can directly send it to the foreign agent, and the foreign forwarder can pick up the goods from the shipping company after receiving the shipowner’s order. As for whether the foreign freight forwarder will take back the freight forwarder when delivering the goods to the actual consignee, this is another matter. Once the foreign forwarder does not require the consignee to return the original bill of lading when delivering the goods to the consignee, the bill of lading in the hands of the consignor can be regarded as waste paper in a sense.

Which delivery method is safer?

Facts have proved that in the export business, as a seller, it is necessary to carefully select the appropriate trade terms according to the specific conditions of the transaction to prevent the risk of foreign exchange collection and improve economic benefits. The following talk about several issues that should be paid attention to when choosing trade terms.


Generally speaking, it is advantageous to use CIF or CFR terminology to trade in export business rather than FOB. Because, under the conditions of CIF, the three contracts involved in the international sale of goods (sale contract, transportation contract and insurance contract) all have the seller as its party, and he can make overall arrangements for stocking, shipment, insurance and other matters according to the situation to ensure the operation process. interconnection on the top. In addition, it is conducive to the development of the domestic shipping industry and insurance industry, and to increase the income of service trade. Of course, this is not absolute. You should first consider whether it is difficult to arrange transportation yourself, and whether it is economical or not, according to the specific conditions of the commodities to be traded. The risk of FOB is that if the designated freight forwarder cannot directly book the space, but book space through other professional airline freight forwarders, then there is no real control over the property rights in transportation, which leads to the inability to solve the problem in time if there is a problem with the transportation.
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Matters needing attention when closing on FOB terms as a last resort


1. The time for the buyer to send the ship to the port to load the goods should be clearly stipulated in the contract, so as to prevent the seller from getting the goods ready, the ship is late, and the loading time is delayed.


2. Increase the deposit ratio and reduce the probability of customer backlash. When the shipping method can’t beat the customer, you must keep the bottom line in the payment method. It is better to make less money or not do business, and not risk losing money.


3. In the trade contract, the buyer and the seller agree on the freight forwarding company, which is not necessarily limited to a certain one. If the carrier and the bill of lading are not filed with the Ministry of Communications of China, then you have to be careful. (The recorded bill of lading and the carrier need to pay a deposit, which makes the bill of lading relatively safe.) If the buyer has to be paranoid about his own opinion, the seller must consider the risk. Accept well-known shipping companies and insist on using shipping company bills of lading, try to avoid using designated overseas freight forwarders and bills of lading issued by them. At the same time, the consignor should request the Chinese freight forwarder to issue a letter of guarantee when the overseas freight forwarder goes through the procedures at the port of shipment, and promises that the goods arranged by the designated overseas freight forwarder must release the goods with the original bill of lading circulated by the bank under the letter of credit after reaching the destination port, otherwise they will be liable for Only in this way, once the goods are released without a bill of lading, can there be a basis for making a claim.


4. In the case of FOB export, it must be clearly stated in the contract that the consignor entrusts the freight forwarder or non-vessel carrier to book space with the shipping company, and the right to book space cannot be handed over to the buyer, because the obligation of booking space and delivery is unified. The shipper (shipper) column in the bill of lading must fill in the name of the shipper (seller). The consignor holds the entrusted booking right, and also holds the control right of the goods. If the buyer’s credit is good and there is a requirement to resell the goods in transit, the buyer can also be the shipper. If you do not know the buyer’s credit, for the sake of safety, it is better to use the seller as the shipper.


5. It is also advisable to use the bill of lading as instructed by the consignee as the issuing act, so that the bank can tightly control the rights of the goods and prevent the risk of releasing the goods without a bill of lading.


6. Invest in China Credit Insurance to hedge risks. Before investing, learn about the countries and regions where they are not insured, as well as blacklisted customers, and learn more about the cases where CITIC Insurance refused to pay, so as to avoid worse problems.

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