In the real foreign trade, how does FOB operate and what is the difference between it and CIF

FOB is fobs (most commonly used for exports).

CNF (C&F, CFR) both cost + freight

CIF both cost + insurance + freight

At present, the most commonly used methods in the world are generally divided into FOB (FOB), CIF (CIF), and bonded area (CIP). Free on Board (FOB) means that after the goods cross the ship's side, the seller has the right to claim payment from the other party according to the contract. That is, for the FOB (FOB), as soon as your goods leave the terminal, you are fine.

For CIF rates, you must deliver the goods safely to the port designated by the other party before you can enjoy the above rights. The intermediary costs are borne by the seller.

Free on board (......"Named port of shipment)" means that the seller completes delivery of the goods when they cross the ship's side at the named port of shipment. This means that the buyer must bear all risks of loss of or damage to the goods from that point onwards. FOB terminology requires the seller to clear the goods for export.

The term only applies to sea or inland waterway transport. If the parties do not intend to deliver the goods over the side of the ship, the FCA terminology should be used.

You ask the freight forwarder. That's it all.

The FOB price of the product is the FOB price, generally the ex-factory price of your factory + FOB fee is good, FOB fee - ask the freight forwarder, specific to the quantity and total amount of your products to measure the cost, you can help the customer find a freight forwarder to book space, you can also let the customer specify the freight forwarder. However, the sea freight and insurance are paid by the customer.

CIF's is a CIF rate. It's all inclusive for you, including charter booking, ex-factory price + sea freight + insurance premium.

The reason for choosing CIF when exporting is that there is an insurance agent for the seller to buy the company, which can promote the development of China's insurance industry; The FOB is chosen when importing because the FOB does not include insurance premiums, and of course, there are reasons to promote the development of China's insurance industry.

CIF means "cost plus freight insurance" in Chinese, and the shipping procedures and freight bearing, as well as the insurance procedures and what expenses are borne by the seller. It is more convenient for buyers to use CIF.

FOB means "Free on Board at the Port of Shipment" in Chinese, and the transportation procedures and freight bearing, as well as the insurance procedures and what expenses are borne by the buyer. Using FOB is more convenient for sellers.

Through the above comparison, it is not difficult to see that it is best to use CIF for export and FOB for import. However, due to the high risk of FOB, the use of FCA has been recommended by the state in recent years. The following factors need to be considered when using the terminology:

Transportation conditions, supply of goods, freight situation, risks on the way to freight, whether there are difficulties in handling the procedures for import and export of goods. Only by fully considering various circumstances can the risks be minimized and the returns maximized.

The reason why most domestic enterprises use FOB for export and do not use CIF:

1. The transaction method FOB is the result of the negotiation between the importer and exporter, and if the domestic export can be negotiated CIF, it is beneficial to the exporter.

2. General importers also hope to make transactions with FOB to avoid collusion between manufacturers and shipping companies to cause purchase costs.

3. The national statistical export is based on FOB statistics, for the convenience of statistics, most domestic enterprises adopt FOB this way of export.

4. It is determined by the buyer's market. Because the international market, especially the market for purchasing in China, is basically a buyer's market, and the buyer has the initiative. The buyer asks the seller to FOB** for its own benefit.

5. Unstable factors lead to the seller's reluctance to take the initiative to use FOBThe instability of international fuel oil** currencies of various countries** and the risk of war in the Gulf region has caused the shipping company's ocean freight** to go with the market, which is not conducive to the seller's calculation of freight costs. The estimate is low, the seller loses money, and the buyer thinks it is unfair if the estimate is high, so the seller is unwilling to take the initiative to use FOB****.

The main differences between FOB and CIF clauses are as follows:

First, the delivery method is different.

FOB: Free Quay at the Port of Shipment, the cost and risk of the cargo crossing the side of the ship. The seller is responsible for the export customs clearance procedures, and the buyer is responsible for the charter and booking of the ship, the cost of transporting the goods to the port of destination and the import customs clearance.

CIF: Free at the port of destination, the cost and risk are bounded by the unloading of the goods at the port of destination. The seller is responsible for the export customs clearance, freight and insurance (general insurance) for the goods to be transported to the port of destination. The buyer is responsible for the unloading charges and import customs clearance procedures at the port of destination.

Second, the difficulty of claiming is different.

In the actual export business, if the goods have been loaded on the ship, they suffer from force majeure, natural disasters or accidents at the port of shipment or in transit, and the documents submitted by the seller have "discrepancies" with the provisions of L C, and the risks borne by the issuing bank are different from those borne by the issuing bank.

In the case of FOB and CNF, the buyer handles the insurance, the policy is in the hands of the buyer, and the insurance company is mostly abroad, so it is difficult for the seller to claim compensation from the insurance company, especially in FOB terminology, the seller has to find the buyer to designate the shipping company for chartering and booking.

3. The substance is different.

The constituent factors of the price of the goods include the usual freight and the agreed insurance premium from the port of shipment to the agreed port of destination, so the seller, in addition to the same obligations as the CFR terminology, must also apply for freight insurance for the buyer, pay the insurance premium, according to the general international practice, the seller should add 10% of the insurance amount according to the CIF price.

In FOB transactions, the buyer is responsible for dispatching the ship to take delivery of the goods, and the seller shall load the goods on the vessel designated by the buyer within the port of shipment and the specified period specified in the contract, and notify the buyer in a timely manner. When the goods are loaded onto the named vessel at the port of shipment, the risk passes from the seller to the buyer.