I hope to exchange my exporting experiences of 20years. Theoretically speaking to exporters, FOB china port is not much different to CIF or CNF term,only the Freight and Insurance will be added to the FOB costs. But in acutal operation, I found that it is much different and influence our final costs very much. The reasons are:
1)Based on FOB term,usually the Buyer(importer) would be in the charge of ordering the vessel and containers. The exporter(the seller) has to contact the appointed shipping co.or the shipping agency in advance according to the advise from the buyer. But sometimes the buyer gives the advise too late,and sometimes, owing to some inspections by the port Customs which needs about 3-5days, the exporter(the seller/the Shipper) has to transport the goods to the port or container yard at least 10days ahead. Usually the container Yard will charge the storage cost after one week. If you order the vessel of the shipment on sunday, and if you transport goods to the container yard on Monday,it would be possible to have some risks that in case the Customs wants to inspeccion, they usually go to inspect and take sample two days later after you apply to the Customs,because before you have the correct container yard(there are many diferent container yards serving diferent shipping companies),you can not bring your goods to the yard. Facing some problems, it would be no convenient for exporter(shipper) to contact all the parties for the procedures,and the more serious thing is that the exporter(seller) can not get any help from the shipping companies,because it is not you,not the exporter(the seller) to order to them. So you either risks the delay the shipment or having more storage costs happened.
2) Based on FOB term, the seller(exporter) would be busy all the time to take the care of contacting shipping company or the agency,and also keep the comunication about the shipping matters with the buyer(importer). The job is complicated and take you much time,that you can not manage your other business going on.
3) All the parties hope to get the business safe going. FOB term will let the exporter(the seller) feel un-safe,because the shipping companies or the shipping agency won't listen to the exporter(seller), in case that there is some problems, exporter(seller)can not expect to obtain their help or assitances. In the past years, it were happended that some worse shipping companies co-operated with the Buyer(importer,the consignee) and done something negative to the seller(exporter).
Therefore, I think that for exporters(sellers/shippers), it is the best choice to offer and operate supplies based on CIF or CNF(CFR) basis. Do you think so?
Of course, CIF or CFR base is also convenient for most buyers(importers). Doing business, it should be like that buyers(importers)calculate themselves at the destination and exporters(selles) would consider their own costs that can be strictly controled and get the business safe going. Now some foreign Buyers(importers) usually show their big orders for large quantities in order to attract the exporters to accept FOB, isn't necessary to do?
Welcome all the reader to join this discussion. Thank you.
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theoretically FOB is good for the buyer and CFR & CIF is good for the seller to process the business and control the goods.
But i think we had better do flexiblely according to the payment terms etc. If we, the seller, can receive the amount safely, any trade term is ok, i think. If the buyer can receive the goods smoothly, it is meaningless to talk about the trade terms.
Good article, but it depends
I'm Mogen and interested in importing scrap goods, Can tel me the best way to deal with. Normally, their term is 30% deposit and every thing. Can you tel me which one is the safestterms and condition between seller and buyer. I'm really need the help sir. Thank you.