An importer need to look into the options of buying the goods under the terms that are more favorable to his or her expenses. We suggest you should always choose FOB shipping between you and your supplier. But why? FOB is a more cost effective way of shipping goods, as the importer has more control over their shipment.
Free on Board – FOB Shipping
FOB is an abbreviation of ‘Free On Board’, and is a port-to-door shipment. This means that when you trade on FOB terms, your supplier is responsible for all local charges, which include transport to the port, handling of the cargo, and customs clearance at origin. This also means that you have to find a freight forwarder to take over your shipment and carry out the freight when your goods board the ship (or aircraft). As soon as your goods are aboard the ship or airplane, the transport responsibility and cost shifts from your supplier to you as importer.
FOB Shipping Advantages
They are the widely used standards that guide international trade. When it comes to international shipping, FOB shipping and CIF are the most commonly used agreements which determine the responsibility of both the buyer and the seller. At the same time, it defines the point where this responsibility passes to either party.
Includes customs clearance
Suppliers are responsible for clearing goods through customs at export, including export clearance documents at the port or terminal under FOB, which could save an importer considerable hassle and further complications. This could also save money and time for the buyer.
Most cost effective term for shipping costs
You’ll probably be aware that CIF and CNF gives the supplier the responsibility to transport goods to the port, airport or terminal in their country, whilst DAP or DDP takes this a step further and gives the seller the responsibility of getting the goods to your destination place.
Understanding FOB Terms
F.O.B. Origin, Freight Collect:
- “FOB Origin” refers to the legal fact that the buyer assumes title of the goods the moment the freight carrier picks up and signs the bill of lading at the origin pick-up location.
- “Freight Collect” refers to the legal fact that the buyer is responsible for all freight charges. The buyer also assumes all risks of transportation, and therefore is responsible for filing claims in the case of loss or damage.
F.O.B. Origin, Freight Prepaid:
- “Origin” refers to the legal fact that buyer takes ownership at the time of carrier pickup.
- “Freight Prepaid” refers to the legal fact that the seller accepts responsibility for all freight charges and freight claims exposure.
F.O.B. Destination, Freight Collect:
- “FOB Destination” refers to the legal fact the seller retains title and control of the goods until they are delivered. The seller selects the carrier and is responsible for the risk of transportation and filing claims in case of loss or damage.
- “Freight collect” refers to the legal fact that the buyer is responsible for the freight charges.
F.O.B. Destination, Freight Prepaid:
- “Destination” refers to the legal fact that the seller retains ownership until a claim free delivery is affected.
- “Freight prepaid” refers to the legal fact that the seller is responsible for all freight charges.
What is the difference between CIF and FOB?
Cost, Insurance and Freight (CIF) and Free on Board (FOB) are international shipping agreements used in the transportation of goods between a buyer and a seller.
They differ in who assumes responsibility for the goods during transit. Both contracts specify origin and destination information that is used to determine where liability officially begins and ends.
Is FOB a good logistics solution?
By using an independent professional freight forwarding company, you’ll likely save costs and ensure goods are safely transported to the end destination. We’d always recommend:
- getting quotes
- researching the different transport options or transport terms
- also understanding where your risks and liabilities are
Cannonball Express Transportation
Cannonball Express Shipping Company has been providing top-of-the-line service at a reasonable rate. Based in Omaha, Nebraska, we provide nationwide refrigerated LTL services, as well as, local delivery services. Contact us today!
Nationwide Shipping Company Services:
- Refrigerated LTL deliveries in the lower 48 states
- Refrigerated Cross dock
Local Shipping Company Services:
- Redelivery Services
- Truckload & LTL Capabilities
- Cross dock
- Warehouse and Distribution capabilities from multiple Omaha Locations