Under FOB terms, do these unexpected additional costs need to be borne by the shipper?

Sunny Worldwide LogisticsIt is a logistics company with more than 20 years of transportation experience, specializing in Europe, the United States, Canada, Australia, Southeast Asia, etc., and is more of a cargo owner than a cargo owner~

We all know that FOB (Free On Board) is also called FOB, which means free on board at the port of shipment. For transactions conducted on an FOB basis, the buyer is responsible for sending a ship to pick up the goods. The seller should load the goods onto the ship designated by the buyer at the port of shipment stipulated in the contract and within the specified time limit, and notify the buyer in a timely manner. Risk passes from the seller to the buyer when the goods are loaded onto the named ship at the port of shipment.

So under the FOB terms, what costs does the shipper have to bear?

1. Regular expenses payable

We all know that under FOB conditions, the shipper is generally only responsible for the port of departure fees, that is, the fees before boarding the ship, including: picking up fees, packing fees, port miscellaneous fees, port security fees, bill of lading fees, manifest entry fees, terminal fees Handling fee (THC) or origin surcharge (ORC), sealing fee, customs declaration fee, etc.

Special attention should be paid to the manifest declaration fees for AMS in the United States and ENS in the European Union. Since they are declared before shipment at the port of departure, these fees are expenses incurred before "offshore" and should generally be borne by the shipper. Of course, this is excepted if the customer agrees to bear this part of the cost.

2. Unexpected expenses

1. Charges for improper connection of shipping and cargo

FOB, ship cargo connection is the key. If the container is not loaded into the port in time and cannot be loaded onto the ship, the empty space fee, demurrage fee, etc. will be borne by the shipper; on the contrary, if the goods are prepared and loaded too early, the overdue container shipping fee, storage fee, etc. will also be borne by the shipper. borne. Therefore, FOB must repeatedly confirm the shipping date and port of shipment, maintain close communication, and ensure the connection between ships and cargo.

2. Costs incurred when no one is available to pick up the goods at the destination port

For some reason, the consignee did not pick up the goods or pay the freight after the goods arrived at the port of destination. At this time, in addition to being unable to recover the freight in time, the carrier also faced situations where the goods would be auctioned by local customs or incur high storage fees. Therefore, payment may be requested from the consignee first, and then turned to the shipper if no result is obtained.

shipping fee:In principle, it should first be borne by the consignee. If no one picks up the goods, it may be transferred back to the consignor.

Pick up:First, notify the consignee to pick up the goods. If no one picks up the goods, notify the consignor to handle it, such as return shipping or resale, etc.;

Demurrage fee and demurrage fee at destination port:Demurrage fees and port demurrage fees will be incurred if no one is available to pick up the goods. If the goods are not delivered, the shipper may be required to bear the fees.

3. High designated agency fees

The fees given by designated freight forwarders are often much higher than those of ordinary freight forwarders. This is because the freight forwarder is designated by the consignee, that is, the consignee enters into a transportation contract with the freight forwarder, not the seller. The freight forwarder is responsible for the consignee.

There is no direct contractual relationship between the shipper and the freight forwarder, and generally there is no possibility of price negotiation. Therefore, a series of fees for the port of departure given by the designated freight forwarder will be relatively higher than those of ordinary freight forwarders. If this difference is not excessive, the shipper will have to reluctantly accept the high fee in order to send the goods smoothly.

4. Compensation for cargo damage

When the goods are unpacked and inspected at the destination port, if the goods are found to be damaged, the consignee will generally bear the responsibility under FOB conditions. Moreover, the consignee usually has insurance and can apply for insurance compensation. But if it is not handled, the consignee may still negotiate with the shipper.

If the cargo damage is caused by the consignor's carelessness in packaging, inspection of cabinets, or other special circumstances before boarding the ship, he will be held responsible to a certain extent and needs to be negotiated and compensated accordingly. If you can prove that it is not your responsibility, you can take out the packing photos, packing list or other supporting documents and let the consignee make a claim to the ship.

5. Losses caused by delivery of goods without a bill of lading

Under FOB terms, the shipper is more often a designated freight forwarder than a designated shipping company. However, since the designated freight forwarder usually maintains a close business relationship with the consignee, it is very likely that the designated freight forwarder will release the goods directly to the consignee without taking back the original bill of lading, that is, releasing the goods without a bill of lading, causing the consignor to Holding the bill of lading, but actually losing all the money for the goods, ultimately causing heavy losses.

6. The “soft pit” of letters of credit

Soft terms of a letter of credit are terms set by the applicant for issuing a letter of credit in the letter of credit. Such terms will threaten the beneficiary's safe collection of foreign exchange, and give the applicant the initiative to trade or defraud the interests of goods and advance payments. They have hidden effects. sex.

If the consignor is not careful and the documents submitted are inconsistent with the letter of credit, payment will be refused. After delivery, the consignor will be in a passive position and be in a dilemma, and the payment for the goods will be damaged.

3. Summary

Therefore, we must have risk control awareness when shipping goods by sea.

1. If you can try to adopt CIF or CFR, try not to use FOB trade terms.

2. Strive to use the shipping company's bill of lading instead of the freight forwarder's bill of lading.

3. When accepting a designated freight forwarder, the qualifications of the freight forwarder must be carefully reviewed

4. Attention must be paid to controlling the ownership of goods

5. The issuance of the bill of lading must be very cautious. You cannot accept the request of the other party as the shipper of the bill of lading, and try not to accept a named bill of lading, and do not make it a bill of lading based on the instructions of the consignee), but a bill of lading based on the instructions of the consignor.

6. Insure land transportation insurance to eliminate insurance blind spots from the shipper’s warehouse to the shipping port.

7. Contracts and letters of credit must be carefully reviewed, soft clauses must be avoided, and the requirements of the contracts and letters of credit must be strictly followed when issuing various documents.

8. Insure relevant export credit insurance to avoid and transform risks.