CIF or CNF term is the best choice for exporters 9 replies,38695 views
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.
Yu
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just my own two cents: I as a buyer prefer FOB delivery for the following reasons:
1. At FOB delivery I receive the B/L after embarking that means I am the owner of the goods. I can decide if I want insurance, and if an accident happens I will receive the insurance amount. I can sell the B/L or I can change the destination if I want. I am in full control of the costs. I can pick my forwarder and if they have an office in my country I can take legal action easily if they fail in something. Depending on the payment terms FOB also may mean that I am in possession of goods before I have paid.
2. In many cases the CIF prices do not include the destination fees of the destination port (loading, handling, temporary warehousing etc). My experience is that if these costs add to the CIF price the total cost is many percents higher than the FOB total costs! It is very annoying and in this case the forwarding company can deliberately pressurize you for any costs since they are in possession of the goods.
The only point for CIF may be that sometimes more convenient, but regarding that the customs clearance and inland shipping must be organized by me in this case as well, arrangement of the shipping must not be a problem either, it is only a little more work.
If suppliers really wanted to help their buyers they would do DDU or DDP delivery with payment upon arrival of the goods, which may be very difficult in many cases. So far I think FOB is a good solution for both parties.
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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.
Right?
Good.
Good article, but it depends
CIF.
Hello sir,
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.
Mogen,
013-5184195
mogan_mk83@
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