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FOB is the best reason to refuse freight forwarding, but have you considered shipping without a single order?

FOB is the best reason to refuse freight forwarding, but have you considered shipping without a single order?

2020-04-21

We all do FOB, no freight forwarding is required. "Many freight forwarders received the most rejections when they called on the phone. FOB terms, too lazy to transport, and the consignee designation is good. But is FOB really good? The following will help you analyze the risks of FOB.

FOB terms, designated freight forwarding, high LOCAL costs, and not so friendly attitude are all trivial matters. The real risk is the property rights and the delivery of goods without a single bill. FOB means that the buyer designates the carrier and the buyer controls the transportation; the freight forwarder often listens to the buyer, or even directly controlled by the buyer; the delivery of goods without a single order usually occurs in this situation!

 Under this trade method, two sets of bills of lading are usually generated: ship owner's order and freight forwarding order. The freight forwarder uses its own (or its agent) as the shipper to book the space to the shipping company and obtain the ship owner's order; the domestic exporter obtains the bill of lading issued by the freight forwarder (even the bill of lading is not available), which is usually displayed by the shipper and the consignee Sellers and buyers.

After the freight forwarder obtains the ship owner's order from the shipping company, it can directly send it to the agent abroad. After receiving the ship owner's order, the foreign freight forwarder can pick up the goods from the shipping company. As for whether the foreign freight forwarder has to collect the freight forwarding form when delivering the goods to the actual consignee, this is another matter. Once the foreign freight forwarder does not require the consignee to return the original bill of lading when delivering the goods to the consignee, the bill of lading on the consignor's hand can be regarded as waste paper in a sense.

What is the most important thing in foreign trade? Undoubtedly, it is the property right, and the property right is money. Do not fall into the bargaining day and fall into a trap set by others. Still in that sentence, remedial afterwards is not as good as prevention. Especially for new traders, you need an old freight forwarder to escort. Adopting CFR / CIF is undoubtedly the best protection for yourself.

Real Case Scenario

A furniture export company on the Qingdao (hereinafter referred to as the seller) signed a trade contract with the Korean company (hereinafter referred to as the buyer). The Qingdao company will export one piece of wooden furniture to the Korean company in the form of FOB.

After the seller has prepared the goods, he will book and deliver to Qingdao Freight Forwarder A according to the buyer's instructions. Freight Forwarder A will deliver a full set of original bills of lading to the seller. The issuer of the bill of lading is Company B.

After getting the bill of lading, the seller claimed the buyer's payment based on the copy of the bill of lading according to the agreement, but no payment was received from the consignee until the goods arrived at the destination port. Although the bill of lading is still in its own hands, after all, the payment has not been received, and any return or resale of the third party will bring no small losses, so the seller continues to urge. However, later, the seller learned that the goods had been taken away and the buyer would not pay any more! With the bill of lading in hand, how can the goods be taken away?

So the seller litigated to the court and demanded that the carrier be held accountable. The court ruled that carrier B was liable for compensation. But the question is, does the carrier have sufficient compensation? At present, companies that dare to release goods without a single order are usually like this: leather bag companies or overseas; it is not easy to let them take responsibility.

The risk of FOB is also that if the designated freight forwarder cannot book the cabin directly, and the cabin is booked through other professional airlines, there is no real control over the property rights in the transportation, which leads to the failure to solve the problem in time if the transportation has problems.

The seller may say that the transportation of this FOB cargo is not our responsibility and has nothing to do with us. I do n’t need to worry. It is precisely this point of view that has some problems because when the cargo transportation route is a multiple choice question when the transportation time is extended, the increase is the increase in the circulation cycle of the manufacturer's funds. For example, in South America, some ships will take about 60 days, and some will take half the time. This will delay the time to collect money from customers. In order to reduce transportation costs, the consignee sometimes does not hesitate to designate a ship with a longer voyage. This behavior is understandable. Of course, some manufacturers are willing to take a ship with a longer voyage because of warehousing reasons. If the value of the goods is small, then nothing can be seen. If the value of the goods is large, the slow payment speed of the guests will lead to the uncertainty of the exchange rate problem. The manufacturers have a deep experience. The current exchange rate changes every day, and the exchange loss problem, We have to pay attention. 

The worse the economy, the more attention is needed. It is not impossible for many customers to make inquiries on their forefronts and close their backs. Without the full payment of FOB, the risk of releasing goods without orders cannot be ignored. The most effective way to avoid goods without order is to adopt the CFR clause or CIF clause. The recommended CIF clause is that transportation insurance can be better seamlessly connected to avoid the risk of unfavorable connections.

Once there is no single delivery, the suggestions given online include finding embassies, international lawsuits, and various blacklists .... and not to mention whether the customer is a professional scam, will it be cunning rabbit three caves, there are several Whether the company has a gangster background, just going overseas to follow up Zhang Luo, it is inevitable that the people will be hurt and the mentality will be exhausted, and the next business will not need to be done. Nowadays, exchange rate fluctuations and trade frictions are struggling under various circumstances. Collecting money is definitely the top priority. Drive carefully for thousands of years.


Which countries can deliver goods without orders

The countries that implement the no-bill delivery policy in Central and South America are mainly the following: Brazil, Nicaragua, Guatemala, Honduras, El Salvador, Costa Rica, Dominica, Venezuela; and African countries such as Angola and Congo can release goods without a single bill.

In these countries, the unilateral release of goods is carried out on imported and exported goods. The customs decide whether to release the goods to the person who pulls the goods, which to a certain extent poses a greater risk to the owner and freight forwarder.

In addition, some countries, such as the United States, Canada, and the United Kingdom, allow the delivery of copies of registered bills of lading. This means that if the payment cannot be recovered in time, even if the owner and the forwarder hold the original bill of lading, it will not help, and the payment cannot be guaranteed safe.


CNS INTERTRANS(SHENZHEN) CO. Ltd, is an a-class freight forwarder. Welcome to consult.


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