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Rank: Advanced Member
Joined: 9/12/2010
Posts: 253
Points: 465
Location: INDIA
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Yesterday i sent a consignment to UK , the invoice shows the value of the items is much lesser than the value of the frieght charges hence my forwarding agent advised me to change the pament to FOB instead of CIF. Please explain me the relavence of FOB in this case.
thanks and regards
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Rank: Advanced Member
Joined: 11/22/2009
Posts: 1,616
Points: 4,897
Location: New Mexico, United States
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The term FOB stands for "Free on Board" and means that the seller has turned over the responsibility for delivery to the shipping service. I am sure a good search engine could find additional information. It might be good to look at the "terms and conditions" of the contract as well to see what defintion of FOB the shipping service uses as it could be different from standard use.
"He who never made a mistake never made a discovery." Samuel Smiles
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Rank: Advanced Member
Joined: 10/21/2010
Posts: 105
Points: 315
Location: United States
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My thanks to both of you, prince and MarySM - I learned something today!
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Rank: Advanced Member
Joined: 4/2/2009
Posts: 674
Points: 1,222
Location: United States
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When you make a shipment to your customer to UK from India on open account, the terms "Fob", "CIF" and "consignment" can be loosely interpreted as long as the consignee(UK) and the consigner(YOU) have meeting of the minds,insofar as who pays the shipping agent's handling charges,insurance and freight etc.
If you are making a shipment against a letter of credit(LC),you must conform to Uniform Commercial Code (UCC)when interpreting these terms.Usually, a shipping broker and the bank who transacts your LC are your trusted sources.Good Luck.
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Rank: Advanced Member
Joined: 10/12/2010
Posts: 243
Points: 729
Location: Philippines
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Wow! That's new to me! Thanks guys!
>Yael<
Hangguk mal haseyo! Molayo! :)
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Rank: Newbie
Joined: 10/17/2010
Posts: 7
Points: 14
Location: Staten Island,N.Y.-USA
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Rank: Advanced Member
Joined: 9/15/2009
Posts: 135
Points: 404
Location: Turkey
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Things are changing,
The ICC is issuing a revised version of the incoterms.
I would recommend you to google Incoterms 2010 for further insight to delivery terms in commercial activities.
Yes! -Anonymous
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Rank: Advanced Member
Joined: 4/30/2009
Posts: 95
Points: 284
Location: United States
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cif is usually - cost, insurance, freight charges that is combined with the cost of the goods to the buyers port/airport (or door if specified) usually given in a quote to the buyer prior to completing the sale.
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FOB must have a point of reference (as to where the sellers responsibility for transport and care of the goods ends).
FOB factory
FOB port
FOB broker
FOB vessel/aircraft
buyer's (consignee) freight forwarder/customs broker will usually coordinate movement of goods and any requested insurance (if insurance is available)
"Its Windy today" ... "No, it's not. Its Thursday." ... "Me too. Let's go have a drink".
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Rank: Advanced Member
Joined: 5/25/2010
Posts: 240
Points: 726
Location: Atlantis
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In a nutshell he doesn't want to pay the freight charges to Carrier before Vsl departure (I am assuming your goods are delivered by sea) because the value of the goods is lower than the surcharges. You'll pay the costs when you pick up your container and release the cargo (Free on Board).
Collect Freight usually covers all the costs before Vsl departure and consignee will pay only local charges not ocean freight and surcharges.
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