Our clients on purchases of Full truckload FTL or Less-than-truckload LFL usually select one of the shipment options we offer. This article explains and expresses our view on the benefit of each of these options we offer.

Those three letters shipping terms references, such as EXW, FOB, CIF, and DPU are among a set of Incoterms (International Commercial Terms). They are recognised rules that guide purchasers and suppliers to fulfil a contract for the shipment of containerised goods.

Import and export are complicated processes. The Incoterms help to distinguish which party is responsible for meeting each of those requirements in the process. Whilst we offer many different shipping terms, Free on Board (FOB) and Cost, Insurance, and Freight (CIF) are by far, the most popular options. Therefore, we will focus on these two shipping terms in this article.

The below table shows the allocation of cost according to Incoterm 2020.

FOB _{(Free on Board)}

Indicating “FOB port” means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays the cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination. The passing of risks occurs when the goods are loaded on board at the port of shipment.

On purchases where FOB shipment is required, the buyer covers the entire cost of shipping and local charges incurred, such as but not limited to import service fees, terminal handling charges, customs clearance charges, customs examination charges, port security charges, wharfage, crane charges, deferment charges, quay rent, and demurrage charges. We offer a level of service to the customer’s needs. For example, if the customer wants us to facilitate customs clearance but will collect the cargo by their own arrangement. We will release a PIN code for the Vehicle Booking System (VBS) so that the customer can arrange a lorry to collect the cargo. If the customer wants us to arrange it to door, then we will arrange that with our logistic partners to have the container delivered to the site. If the customer cannot or does not want to devan onsite, we can arrange to strip the cargo and place it on the side curtain lorry for a palletised delivery. This will be billed to the customer accordingly as these costs are not covered by the proforma. Although the settlement for the goods must occur prior to container release, as some of the services we carried out is post released, therefore if charges have arisen, such as a waiting charge, a separate invoice will be issued after the completion of delivery.

CIF _{(Cost, Insurance & Freight)}

Cost, insurance, and freight (CIF) represent the charges paid by a seller to cover the costs, insurance, and freight of a buyer’s order while the cargo is in transit. Cost, insurance, and freight for containerised goods transported via a waterway, sea, or ocean.

The goods are exported to the buyer’s port named in the sales contract. Once the goods are loaded onto the vessel, the risk of loss or damage is transferred from the seller to the buyer. However, insuring the cargo and paying for freight remains the seller’s responsibility.

The proforma quoted price is inclusive of the shipping cost but not local charges incurred, such as but not limited to import service fees, terminal handling charges, customs clearance charges, customs examination charges, port security charges, wharfage, crane charges, deferment charges, quay rent, and demurrage charges. We offer a level of service to the customer’s needs. For example, if the customer wants us to facilitate customs clearance but will collect the cargo by their own arrangement. We will release a PIN code for the Vehicle Booking System (VBS) so that the customer can arrange a lorry to collect the cargo. If the customer wants us to arrange it to door, then we will arrange that with our logistic partners to have the container delivered to the site. If the customer cannot or does not want to devan onsite, we can arrange to strip the cargo and place it on the side curtain lorry for a palletised delivery. This will be billed to the customer accordingly as these costs are not covered by the proforma. therefore if charges have arisen, such as a waiting charge, a separate invoice will be issued after the completion of delivery.

Unlike FOB, we allow our customers to settle the inbound goods with a more flexible approach. Our CIF term allows customers to settle within 14 days from the shipment on board date showing on the Bill of Lading (BoL). Most of our container contracts are in Yuan (CNY), the currency of P.R.China. The 14 days window allows customers to settle on a day they speculate to be the most favourable in the exchange rate. For more information on our contract ForEx element, please see our next article.