Detailed explanation of international trade terms: FAS/FOB/CFR/CIF, with a new trade term change list/price structure
(5) FOB Stowed and Trimmed (FOBST): This variation means that the seller bears the shipping costs including stowage and leveling charges.
1. Foreign freight (transportation fee from the inland departure point in the exporting country to the foreign destination);
1. Convert FCA price to other prices
Terminology
FAS
▲FAS贸易术语图解
(1) Within the time limit specified in the contract, deliver the goods that comply with the contract to the ship bound for the designated port of destination at the port of shipment, and give the buyer a shipping notice.
(5) Responsible for all costs and risks until the goods cross the ship's rail at the port of shipment.
术语精讲
卖方的主要义务
CPT price = purchase cost price domestic cost foreign freight net profit
3. Storage costs (including warehouse rent, fire insurance, etc.);
D. Differences between export customs clearance and U.S. trade practices:
买方的主要义务
CIP price = CPT price / (1-insurance bonus × insurance rate)
3. Storage costs (including warehouse rent, fire insurance, etc.);
(1) Responsible for delivering the goods to the shipside designated by the buyer at the designated port of shipment within the specified time limit.
Deformation of F.FOB
(3) Responsible for chartering or booking space, and paying the normal freight to the destination port.
(2) Although the ship arrives at the port at the agreed time, it still has to queue up when docking at the dock. At this time, the seller's risk should be transferred to the buyer in advance.
It is best for both the buyer and the seller to clearly stipulate this matter and the related risks and expenses in the contract to avoid trade disputes.
(3) Obtain an import license or other officially approved documents at your own risk and expense, and be responsible for handling all customs procedures required for the import of goods.
(6) Responsible for providing the usual shipping documents, commercial invoices and insurance policies for goods shipped to the designated port of destination, or electronic information with equivalent validity.
FOB
▲FOB贸易术语图解
(4) The buyer dispatches the ship on time, but due to various reasons (the ship may be unseaworthy or unfit for the cargo), the goods cannot be loaded on the ship, or the shipment ends early. At this time, the risk should be transferred to the buyer in advance.
术语精讲
卖方的主要义务
CIP price = (FCA price foreign freight) / (1-insurance bonus × insurance rate)
(3) Bear the risks and expenses from the time the goods are delivered to the buyer's shipside at the designated place.
(4) CFR Ex Ship's Hold (CFR bilge delivery) or CIF Ex Ship's Hold (CIF bilge delivery): After the goods arrive at the destination port, the buyer will open the ship by himself and bear the responsibility for the goods to be transported from the bilge The cost of unloading onto the dock.
6. Document fees (including commodity inspection fees, notary fees, consular visa fees, certificate of origin fees, license fees, customs declaration fee, etc.);
买方的主要义务
C. Provisions for shipper of bill of lading under FOB terminology:
(1) Receive the goods and pay the price according to the provisions of the sales contract.
CIF price = (FOB price foreign freight) / (1-Insurance bonus × insurance rate)
CFR price = CIF price × (1-Insurance markup × insurance rate)
Terminology
The correct format should be three paragraphs like this:
CIP price = purchase cost price domestic cost foreign freight foreign insurance premium net profit
(2) Responsible for handling the export procedures of goods and bearing the costs of export customs clearance.
(2) Responsible for handling goods export procedures and obtaining export licenses or other approval certificates (origin, commodity inspection certificate, etc.).
(3) Bear all costs and risks after the goods are delivered to the vessel arranged by the seller at the port of shipment.
(3) Collect the goods delivered by the seller in accordance with the contract and accept documents that are consistent with the contract.
Points to note in actual business(5) Responsible for providing goods and commercial invoices that comply with the provisions of the contract, or electronic data interchange information with equivalent validity, as well as transportation documents and other relevant documents stipulated in the contract.
Points to note in actual business(1) CFR Liner Terms (CFR Liner Terms) or CIF Liner Terms (CIF Liner Terms): Unloading costs are handled according to the liner method and are borne by the shipowner or seller, that is, the buyer does not bear the unloading costs.
E. Risk prevention measures for FOB contracts(2) FOB under Tackle (FOB under Tackle): The seller bears the cost of delivering the goods to the hook of the buyer's designated ship, and the buyer is responsible for hoisting into the cabin and other costs.
Main obligations of the buyer
(3) Obtain an import license or other officially approved documents at your own risk and expense, go through the customs procedures required for the import of goods, and pay customs duties and other related fees.
(2) Responsible for obtaining export licenses or other officially approved documents (commodity inspection certificate, certificate of origin, etc.), and handling all customs procedures required for export of goods.
F.FOB的变形
1. Foreign freight (sea transportation costs from the port of shipment to the port of destination);
FCA price = CIP price × (1 - insurance markup × insurance rate) - foreign freight
But in fact, the release of any version of terminology does not mean that the previous version is invalid. As long as both parties are willing,
(4) Bear all costs and risks after the goods are delivered to the ship sent by you at the port of shipment.
A. Under FAS terminology, shipside usually refers to the reachable range of the cargo crane or shore loading and unloading rigging of the ship's loading and unloading equipment.
A. Usually the following five situations occur, and the risk will be transferred to the buyer in advance:
CFR
▲CFR贸易术语图解
This article will explain the second category of four trade terms applicable to water transportation. At the end of the article, there is a list of changes in trade terms in 2020 and the price structure of commonly used trade terms. It is recommended to collect them!
术语精讲
卖方的主要义务
8. Estimated losses (loss, short loss, leakage, breakage, deterioration, etc.);
5. LCL fee (if the goods do not constitute a full container);
FOB price = purchase cost price domestic expenses net profit
CFR price = purchase cost price domestic cost foreign freight net profit
(2) Responsible for handling goods export procedures and obtaining export licenses or other officially approved documents.
买方的主要义务
▲Illustration of CFR trade terms
3. If there is an intermediary, it also includes the commission paid to the intermediary.
(3) Responsible for chartering or booking space and paying the sea freight to the destination port.
3. Convert CIF price to other prices
FOB
(1) If the ship planned by the buyer does not arrive at the agreed time, resulting in losses due to dock storage costs or cargo detention, the risk should be transferred to the buyer in advance.
(3) FOB Stowed (FOB stowed fees included): The seller is responsible for loading the goods into the hold and bears the shipping costs including stowed fees. The cargo handling fee refers to the cost of placing and sorting the cargo after it enters the cabin.
▲Illustration of CIF trade terms
(4) Bear all costs and risks before the goods are delivered to the vessel arranged by you at the port of shipment.
(2) Complete the import procedures for goods and obtain an import license or other officially approved documents at your own risk and expense.
(2) Responsible for chartering or booking space, paying freight, and promptly notifying the seller of the ship name, shipping location and delivery time.
There is no problem in using the previous version, but it must be stated in the contract which version of the terminology is used.
(5) The ship arrives at the port on time, but the seller fails to load the ship in time. If the reason is that the buyer did not give the seller enough time to ship the goods, the buyer shall bear the responsibility.
CIF
▲CIF贸易术语图解
(2) CFR Landed (CFR unloaded to the shore) or CIF Landed (CIF unloaded to the shore): The seller shall bear the unloading charges, including the barge charges for unloading the goods to the shore by barge because the ship cannot dock..
1. Processing and finishing costs;
▲Illustration of FAS trade termsFOB price = CIF price × (1 - insurance premium × insurance rate) - foreign freight
术语精讲
卖方的主要义务
CIF price = purchase cost price domestic cost foreign freight foreign insurance premium net profit
(2) Bear all costs and risks after the goods cross the ship's rail at the port of shipment.
Conversion of the three terms FCA, CPT and CIP:
FCA price = CPT price - foreign shipping fee
2. Foreign insurance premiums (maritime cargo insurance);
8. Estimated losses (loss, short loss, leakage, breakage, deterioration, etc.);
买方的主要义务
B. The seller must carefully fulfill its delivery and document obligations:
FCA price = purchase cost price domestic expenses net profit
9. Postage and telecommunications charges (telegram, telex, mail, etc. charges).
CFR
It is still "cargo insurance that complies with Clause (C) of the Association's Cargo Insurance Clauses (LMA/IUA) or any similar clause at your own expense".
*In the trade of bulk goods, especially the trade of primary products such as wheat, cotton, soybeans, ores, exporters usually use this term.
5. Document fees (including commodity inspection fees, notary fees, consular visa fees, certificate of origin fees, license fees, customs declaration fee, etc.);
(1) Accept the relevant documents provided by the seller, receive the goods, and pay the price according to the contract.
(3) CFR under Ship's Tackle (CFR delivery under hook) or CIF under Ship's Tackle (CIF delivery under hook): The seller is responsible for unloading the goods from the ship to the place where the hook can reach (the dock) or on a barge).
C. Unloading costs: terminal operating fees, etc. The PORT TO PORT clause is generally used in CIF. The cost of the port of departure is borne by the seller, and the cost of the port of destination is borne by the buyer.
(1) FOB Liner Terms: Shipping costs are handled according to liner practices, that is, they are borne by the shipowner or buyer, and the seller does not bear the related costs of shipping.
(1) Responsible for delivering goods that comply with the contract to the ship designated by the buyer within the date or period specified in the contract, and promptly informing the buyer.
2. foreign insurance premiums;
Main obligations of the buyer
3. Convert CIP price to other prices
Points to note in actual business
In CIF price terms, the seller’s responsibility
CIF price = CFR price/(1-Insurance markup × insurance rate)
国内费用有：
FAS
2．包装费用；
Points to note in actual business
1. Processing and finishing costs;
(2) Bear the risks and expenses until the goods are delivered to the ship's side at the designated place.
Commonly used trade terms price structure
2. Convert CFR price to other prices
7. Bank fees (discount interest, handling fees, etc.);
[The chosen Incoterm® rule]
国外费用主要有：
▲Comparison chart of trade terms suitable for water transportation methods
2. Convert CPT price to other prices
4. Domestic transportation costs (warehouse to terminal);
Price conversion of major trade terms:
CPT price = FCA price foreign shipping fee
There are four variations of CFR or CIF:
9. Postage and telecommunications charges (telegram, telex, mail, etc. charges).
国内费用有：
CIF
2．包装费用；
CFR price = FOB price foreign freight
The main overseas expenses include:
(1) Responsible for paying the price as stipulated in the contract.
(1) Responsible for handling import procedures and obtaining import licenses or other approval documents.
1. Convert FOB price to other prices
FOB, CFR, CIF trade terms (applicable to water transportation)
The seller’s main obligations
国外费用主要有：
FCA, CPT, CIP trade terms (applicable to any mode of transportation)
2．国外保险费；
Changes in CIF insurance coverage categories in Incoterms 2020
The seller’s main obligations
The main overseas expenses include:
2. Packaging costs;
Terminology
(4) Responsible for handling cargo transportation insurance and paying insurance premiums.
Incoterms® 2020
Main obligations of the buyer
FOB price = CFR price - foreign freight
Main obligations of the buyer
7. Bank fees (discount interest, handling fees, etc.);
Conversion of the three terms FOB, CFR and CIF:
▲Illustration of FOB trade terms
Domestic fees include:
Terminology
(4) Receive the goods according to the contract and accept the transportation documents.
2. Packaging costs;
The seller’s main obligations
Summary: 2020 Trade Terms Change List
Domestic fees include:
6. Shipping fees (shipping, lifting fees, barge fees, etc.);
4. Domestic transportation costs (warehouse to terminal);
(1) Responsible for loading the agreed goods on the ship at the time and port of shipment stipulated in the contract, transporting them to the designated port of destination, and notifying the buyer in a timely manner.
CPT price = CIP price × (1-insurance markup × insurance rate)3. If there is an intermediary, it also includes the commission paid to the intermediary.
Suitable for water transportation
The seller’s main obligations
[Named port, place or point]
Incoterms® 2020
