How to use trade terms when importing and exporting

**Commonly used terms are: FOB (fob), CIF (CIF price), CFR.

FOB (Free On Board): Free on Board (......Designated port of shipment), which provides that the seller must deliver the goods to the ship nominated by the buyer at the named port of shipment within the shipping period specified in the contract and bear all costs and risks of loss of or damage to the goods until the goods cross the ship's side.

CIF (Cost, Insurance and Freight): Cost, Insurance and Freight paid to (......).Designated port of destination) means that the seller must deliver the goods to the ship destined for the designated port of destination at the port of shipment within the shipping period specified in the contract, bear all costs and the risk of loss or damage of the goods until the goods cross the ship's side, apply for cargo insurance, pay insurance premiums, and be responsible for chartering and booking, and pay the normal freight from the port of shipment to the port of destination.

CFR (Cost and Freight): Cost and Freight (......Designated port of destination) means that the seller must deliver the goods to the ship destined for the designated port of destination at the port of shipment within the shipping period specified in the contract, bear all costs and the risk of loss or damage of the goods until the goods cross the ship's side, and be responsible for chartering and booking the ship and paying the normal freight to the port of destination.

CFR = FOB + shipping cost.

c i f = FOB + freight + insurance.

General financial accounting: Exports are based on FOB** and imports are based on CIF**.

In the international market, the term can become an important means for export enterprises to win customers with the change of international market. In order to motivate the other party to buy goods, exporters often use destination delivery terms such as DES, DEQ or DDP, which are more favorable to importers.

Sometimes export enterprises can also choose terms such as CFR, CIF, CPT or CIP to show that they are willing to assume the responsibility of arranging transportation matters such as chartering and booking of goods and paying freight, and even willing to assume the insurance liability of goods, so as to minimize the responsibilities and obligations of exporters.

When choosing the best terminology for transportation factors, the first thing to consider is the appropriate mode of transportation. If the method of sea transportation is adopted, it is best for import and export enterprises to choose the best terms suitable for water transportation, such as FOB, CFR, CIF or FAS. When using land transportation, you can choose the best terms suitable for a variety of transportation methods, such as CPT, CIP, FCA, etc.

In addition, if one of the importers and exporters has sufficient capacity to arrange transportation matters, and it is economically cost-effective, it can strive to adopt the ** term of self-arranged transportation if it can strive for the lowest freight cost. For example, exporters can strive to use terms such as CFR, CIF or CPT and CIP, while importers can try to use terms such as FOB, FCA or FAS. If one of the parties does not intend to be liable for carriage or insurance, every effort is made to choose terms in which the other party is responsible for such liability.

When choosing a term, it is also necessary to take into account the characteristics of the goods, the size of the volume of transactions and the selection of the corresponding means of transport. If the goods require a specific means of transport and the exporter is unable to complete them, the Group F terminology can be selected and the importer is responsible for arranging the transportation. If the volume is too small and there is no direct liner transportation, if one of the enterprises is responsible for arranging transportation, the cost is too high and the risk is also increased, and it is better to choose the term that the other party is responsible for arranging transportation.

For example, an exporter may use Group F terms, while importers may use Group C or D terms. Of course, import and export enterprises also need to consider the domestic charter market.

Freight and surcharge are also one of the constituent factors of the price of goods, and the changes in the freight rate of the chartering market should also be taken into account when choosing the first term, and the risk of freight ** or bearish risk should be taken into account in the price of goods. In general, if freight and surcharges (e.g. fuel charges) are bullish, the term "Freight and Surcharges" (e.g. fuel charges) can be used to avoid incurring the associated costs. If you want to use Group C or D terms for import, and use Group F terms for export.

The opposite is true when the freight and surcharges are bearish.

The choice of transportation route is not only related to the level of freight, but more importantly, it is related to the size of the risk and the handling of relevant insurance matters. If the export enterprise is unwilling to take too many risks, it can choose group E, group F, group C terms, and try not to choose group D; Conversely, if the importer is not willing to take the risk of the goods in transit, it will strive to use Group D terms.

Factors to be considered in the selection of ** terms 1. Conditions of transportation. If it is the buyer, they have the ability to transport, and it is economically cost-effective, they can strive to import according to FCA and FOB conditions, and export according to CIP, CIF or CFR conditions. Second, the supply of goods.

There are many varieties of goods in the world, and different types of goods have different characteristics, and their factors in terms of transportation, turnover, etc., are all issues that should be taken into account when choosing the first terminology. 3. Freight factor. Freight is one of the factors that make up the price of goods, and when choosing the first term, the freight collection of the goods through the route and the trend of freight rate changes should be considered.

4. Risks in transit. In the international **, traded commodities generally need to be transported over long distances, and the goods may encounter various risks such as natural disasters and accidents during transportation. The risks are even greater in times and regions where there is war or where normal international ** is subject to man-made obstacles and destruction.

5. Is there any difficulty in handling the customs clearance procedures for import and export goods? In the international **, some countries stipulate that the customs clearance procedures for import and export goods can only be arranged by or handled by the parties in the country where the customs clearance is located. In some countries, this restriction is not available.

Therefore, when the buyer chooses EXW or the seller chooses the DDP condition, the requirements of certain importing and exporting countries** should be fully considered.

The main functions of terminology in the international arena are: simplifying transaction procedures, clarifying the responsibilities of both parties to the transaction, shortening negotiation time, and saving costs.

1. Types of terms

There are four kinds of international terms, namely E group terms, F group terms, C group terms, and D group terms, which can be divided into multiple languages, which can be used in the transaction process, which is very convenient, and also plays a positive role, and can also clearly indicate the responsibilities that need to be borne when the two parties hand over the goods.

2. The role of terminology

It is beneficial for buyers and sellers to simplify the procedures for negotiating transactions and concluding contracts. Since each term has its own specific meaning, the sale and purchase hole means that the parties can clarify each other's responsibilities, costs and risks in handing over the goods as long as the parties agree on the terms to close. This simplifies the transaction formalities and shortens the time it takes to negotiate the transaction, which facilitates the speedy conclusion of the transaction and the conclusion of the contract between the buyer and the seller.

It is beneficial for both buyers and sellers to calculate the dust and cost. Since the term indicates the constituent factors, when the buyer and the seller determine the transaction, they must consider what subordinate expenses are included in the terminology adopted, which is conducive to the price comparison between the buyer and the seller and the strengthening of cost accounting.

It is conducive to the resolution of disputes in the performance of the contract. When the buyer and the seller negotiate the contract, if the terms of the contract are not well considered, so that the provisions of certain matters are unclear or incomplete, so that the disputes arising in the performance of the contract cannot be resolved in accordance with the provisions of the contract, in this case, the general interpretation of the relevant terms can be invoked to deal with it.

The main roles of terminology in the international arena are as follows:

1. It is conducive to the negotiation of transactions and the conclusion of contracts between buyers and sellers. Since each of the first terms has a unified interpretation of the obligations of the buyer and the seller, it is conducive to the buyer and the seller to clarify their respective rights and obligations and close the transaction as soon as possible.

2. It is conducive to the buyer and seller to calculate the cost of selling imitation. Various terms have a clear definition of who bears the costs, freight and insurance premiums, and it is easier for buyers and sellers to calculate the costs and costs.

The term, also known as the condition, is a short concept, such as CIF, to explain the division of responsibilities between the buyer and the seller regarding procedures, costs and risks, and to determine the respective obligations and the composition of the goods in terms of the seller's delivery or the buyer's receipt of the jujubes.