Transportation charges and matters needing attention under FOB conditions of foreign trade e-commerce

In the field of foreign trade e-commerce, FOB (Free On Board) terms are widely used in international trade. However, under FOB conditions, the issue of transportation and miscellaneous charges has always been one of the important issues that troubles importers and exporters. This article aims to discuss the transportation and miscellaneous charges problems that may be encountered under FOB conditions and their solutions, and further analyze several key points that need to be paid attention to when using the FOB terminology.

Transportation and miscellaneous cost issues and countermeasures

The various miscellaneous charges involved in the shipping process are numerous and flexible. In order to attract customers, some freight forwarders may adopt a low-price strategy to attract orders, and then make up for the losses by increasing miscellaneous fees. This leads to frequent disputes and conflicts between exporters and designated freight forwarders under FOB conditions. The main methods to solve such problems include the following steps:

• Confirm fees: Whether using CNF/CIF or FOB conditions, you should inquire about the freight forwarder’s detailed fee details before booking. Especially under CNF/CIF conditions, it is particularly important to understand the “ALL IN” price.
• Understand the market situation: Consult with several freight forwarding companies to understand the local market conditions, which will help determine whether you have encountered unreasonable charges.
• Resolve through negotiation: If you find that the charges are unreasonable, you should actively communicate with the freight forwarder and strive for a reasonable quotation. When necessary, coordination can be carried out through the customer.

It is worth noting that on some specific routes, such as Japan and South Korea routes, LCL cargo can sometimes receive special discounts or even free services. While this approach may help pass on costs and avoid taxes, it may also harm trade relations.

Issues that should be noted when using the FOB term

Notification issues

According to FOB terms, buyers and sellers need to notify each other of relevant information to ensure the smooth progress of the transaction. Specifically:

• After chartering the ship, the buyer must promptly inform the seller of the name of the ship, loading time and location;
• The seller should also promptly notify the buyer after the goods are shipped so that the latter can arrange insurance matters.

If either party fails to fulfill its notification obligations, it may be liable for the resulting losses.

Contract of carriage

Although the “2010 General Regulations” clearly stipulates that the seller does not need to conclude a transportation contract for the buyer, in some cases, if the buyer requests it and does not raise any objection, the seller can also do it on his behalf.

Shipping cost burden

The specific sharing of shipping costs is more complicated, and different countries and regions have different understandings and practices. Normally, when liner shipping is used, the relevant costs are included in the freight and borne by the buyer; while for chartered shipping, the responsibilities of each party need to be clearly defined. To avoid ambiguity, both parties can add corresponding additional conditions after FOB, for example:

• FOB Liner Terms: The seller does not bear the shipping fee.
• FOB Under Tackle: The seller only delivers the goods to the ship and is not responsible for loading.
• FOB includes stowed: The seller is responsible for the shipping and stowed costs.
• FOB includes trimming (FOB Trimmed): The seller is responsible for the shipping and trimming costs.
• FOB includes stowed and trimmed: the seller is responsible for all related costs.

Shipping and cargo connection

Ensuring that the ship arrives at the shipping port on time is critical to the smooth completion of an FOB transaction. If the vessel cannot be loaded on time due to the buyer’s fault, the relevant costs shall be borne by the buyer; conversely, if the delivery is delayed due to the seller, the liability shall be attributed to the seller.

In short, when using FOB terms for trade, both buyers and sellers need to handle all aspects carefully and maintain good communication to avoid unnecessary disputes.