FOB, also known as “free on board”. In a transaction conducted at the free on board price, the buyer is responsible for sending a ship to transport the goods, and the seller shall load the goods on the ship designated by the buyer at the port of shipment and within the specified period specified in the contract, and notify the buyer in a timely manner.
Under the conditions of CIF export, the problem of ship-cargo connection can be better solved, giving exporters more flexibility and maneuverability. In general, as long as the exporter guarantees that the goods delivered comply with the contract provisions and the documents submitted are complete and correct, the importer must pay.
CIF, also known as “cost, insurance and freight”, means that the seller completes the delivery when the goods cross the ship’s rail at the port of shipment.
After the goods cross the ship’s rail, even if the goods are damaged or lost when the importer pays, the importer shall not refuse to pay for the goods due to damage. That is to say, an export contract concluded at the CIF price is a specific type of “document sales” contract. A smart exporter should not only be able to control the quality and quantity of the goods he sells, but also should control every link in the process of the goods arriving at the destination and the payment being collected.
For the loading, transportation and risk control of goods, we should try to obtain a certain degree of control, so that the profit of trade can be guaranteed. Some large multinational companies require Chinese exporters to trade at FOB prices on the grounds that they can get preferential conditions in transportation and insurance, which is to ensure their control. For example, most of the goods exported to Japan are FOB prices. Even if the exporter offers very favorable conditions, it is difficult to change the price conditions. Therefore, whether to cater to the needs of buyers or to stick to their own principles, it is very necessary for exporters to consider more when quoting.
In the current situation where export profits are generally not very high, it is more important than ever to be thrifty in every link of the entire trade process. Some domestic export companies have good export profits. Their practice is to quote FOB prices first when quoting to the outside world, so that customers can compare the prices of their own products, and then ask CIF prices, and insist on arranging transportation and insurance in the domestic market. They honestly said that doing so not only gives buyers more choices, but sometimes they can also make a little profit on the shipping and insurance costs.