INCORTERM OF FOB SAFE
Years ago,i use the offshore bank accout to get the customer payment 100% in advance,the trade term is FCA,we deliver the goods via DHL,Fedex,PostNL etc airline parcals.All of the process,there is no relationship with the government department of customs,tax,medical registration,Inspection and Quarantine Bureau etc.The products we trade is almost impossible to get the registration both in domestic and oversea due to the medical class Ⅱ and Ⅲ。
When it comes to the large dimension of industrial goods,and the value of goods maybe is not much higher compared with the endodontic files,implants,light cured composite resin,the vessel delivery will be inevitable.Some clients designate a forwarder with a transhipment bill of lading,however;we get the full payment before arrange the shippment.
FOB means that the buyer designates a carrier (usually a foreign freight forwarder and its agent in China), and the buyer controls the transportation; the freight forwarder often listens to the buyer, or even directly controlled by the buyer; the delivery of goods without a signed order usually occurs in this situation.
Under this trade method, two sets of bills of lading are usually generated: ship owner’s bill and freight forwarding bill. The freight forwarder uses its own (or its agent) as the shipper to book the space to the shipping company and obtain the ship owner’s order; the domestic exporter obtains the bill of lading issued by the freight forwarder (even the bill of lading is not available), which is usually displayed by the shipper and consignee as sellers and buyers.
After the freight forwarder obtains the ship owner’s order from the shipping company, it can directly send it to the agent abroad. After receiving the ship owner’s order, the foreign freight forwarder can pick up the goods from the shipping company. As for whether the foreign freight forwarder has to collect the freight forwarding form 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 on the consignor’s hand can be regarded as waste paper in a sense.
Which delivery method is safer?
Facts have proved that in China’s export business, as a seller, according to the specific circumstances of the transaction, careful selection of appropriate trade terms is necessary to prevent foreign exchange collection risks and improve economic efficiency. Let me talk about a few issues that should be noted when choosing trade terms.
Generally speaking, it is more advantageous to use CIF or CFR term in export business than FOB. Because, under the CIF conditions, the three contracts involved in the international sale of goods (sales contracts, transportation contracts, and insurance contracts) are the sellers as their parties, and he can arrange for stocking, shipping, and insurance in accordance with the situation to ensure the operation process. In addition, it is good to the development of the country’s shipping industry and insurance industry, increasing service trade income. Of course, this is not absolute. Factors such as whether it is difficult to arrange transportation and whether it is economically advantageous should be considered first according to the specific situation of the commodities traded.
The risk of FOB is also that if the designated freight forwarder cannot book the cabin directly by the exporter, and the cabin is booked through other professional vessel company, there is no real control over the property rights in the transportation, which leads to the failure to solve the problem in time if the transportation has problems.
The seller may say that the transportation of this FOB cargo is not our responsibility and has nothing to do with us. I do n’t need to worry. It is precisely this point of view that has some problems, because when the cargo transportation route is a multiple routine issue, when the transportation time is extended, it increases the circulation of the manufacturer’s funds.
For example, to South America, some ships will take about 60 days, and some will only take half the time. In order to reduce transportation costs, the consignee sometimes does not hesitate to designate a ship with a longer voyage. This behavior is understandable. Of course, some manufacturers are willing to take a ship with a longer voyage due to storage reasons, which can reduce storage costs. If the value of the goods is small, then nothing can be seen. If the value of the goods is large, the slow payment speed of the customers will lead to the uncertainty of the exchange rate problem. I think the manufacturers have a deep experience. The current exchange rate changes every day. We must pay attention to the problem of exchange rates lost.
Considerations for adopting FOB
1. The time for the buyer to send the port for loading should be clearly stipulated in the contract, so as to avoid the seller ’s cargo being prepared, once the the ship is late, and the shipment date is delayed.
2. Increase the proportion of the deposit and reduce the probability of customer cancel the order. When the shipping method is unacceptable to the customer, the bottom line must be kept in the payment method. It is better to make less or not to do business than to take the risk of losing money.
3. In the trade contract, the buyer and the seller agree that a good freight forwarding company is not necessarily limited to a certain one. If the carrier and bill of lading are not filed with the Ministry of Communications of China, 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.) Accept well-known shipping companies and insist on the use of shipping company bills of lading, and try to avoid the use of designated overseas freight forwarders and bills of lading issued by them. At the same time, the cargo owner should require our country ’s freight forwarder to issue a guarantee letter when going through the port of shipment agent for the overseas freight forwarder, promising that the goods arranged for transportation by the designated foreign freight forwarder must be released on the original bill of lading endorsed by the bank under the letter of credit after reaching the destination port, otherwise, they must bear that there is no liability for the release of goods without a signed order. Only in this way can a claim be made based on the case of goods released.
4. In the case of FOB export, it must be clearly stated in the contract that the consignor will book the carbin from the designated freight forwarder company, and the right to book the space cannot be given to the buyer because of the obligation to book and deliver is unified. The name of the shipper (seller) must be filled in the shipper column of the bill of lading. The consignor has the right to entrust booking, and thus has control over the goods.
5. It is also advisable to use the order of bill of lading of the consignee in the form of an letter of credit, which allows the bank to tightly control the right of the goods and prevent the risk of releasing the goods without a signed order.
What should I do if there is no signed delivery?
In addition to looking for China Insurance, others are slim.
Property rights are the most important thing in foreign trade. Do n’t fall into the trap of bargaining all day long. Still in that sentence, remedial afterwards is not as good as prevention.