Posted 18 Nov 2011 07:32
There is not a way to decide which Incoterm is safer. when you sell FOB (Free on Board), your responsibility ends as soon the cargo has been placed into the vessel. When you sell CIF (Cost, Insurance, Freight), your responsibility ends as soon the vessel arrives to the destination port.
The main issue is how you handle the payment method if you are exporter. Even in you sell CIF, CFR, EXW, FOB, be sure you have the control of the payment instrument.
If you are an exporter, my suggestion is to always request a Confirmed, Irrevocable, At sight Documentary Letter of Credit for the 100% of the goods with all your customers. Many chinese buyers refuse to do this because they know you will cash your letter of credit in the moment you have all the goods shipped or delivered, and the Bill of ladings has been issued.
If a buyer's company insist they can't or they won't confirm a letter of credit, DON"T SELL. You will be in the hands of the buyer and they can take a long time to decide when to pay. That can be very harmful for you and your company.