Three trade terms: There are 13 trade terms in the "Incoterms", among which the three most commonly used terms are the three terms for delivery at the port of shipment; FOB, CFR and CIF.

These three trade terms are only applicable to sea transportation and inland water transportation. The obligations of the buyer and seller in the delivery method of goods and the division of responsibilities, costs, and risks are basically the same, except for the responsibilities of transportation and insurance. There is a difference.

FOB=FREE ON BOARD

A. FOB (...named port of shipment) - free on board at the port of shipment (- designated port of shipment)

According to the interpretation of the "General Principles", the seller must be within the designated shipment period within the contract. Load the goods onto the ship designated by the buyer at the shipping port and notify the buyer in a timely manner. Risk passes from the seller to the buyer when the goods pass the ship's rail at the port of shipment.

The buyer is responsible for chartering the ship, booking space, paying the freight, arriving at the shipping port to pick up the goods within the period stipulated in the contract, and giving the seller sufficient notice of the name of the ship and date of shipment.

The seller is responsible for obtaining various documents required for export declaration and handling export procedures. The buyer is responsible for obtaining various documents required for import customs declaration and is responsible for import customs declaration.

The seller shall provide the buyer with the usual documents to prove that the obligation of delivery and shipment has been completed. The transport documents shall be borne by the buyer at the buyer's expense and risk, and the seller shall provide all assistance in obtaining the transport documents related to the transport contract. The buyer shall accept the goods and documents that are consistent with the contract and pay the price in accordance with the contract.

CFR= COST FRIGHT

B. CFR (...named port of destination) - cost plus freight (...named port of destination)

The difference between CFR and FOB is that the seller is responsible for chartering the ship, booking space and paying the freight. According to the interpretation of the General Principles, the seller only needs to charter a ship and book space under normal conditions and transport the goods via customary routes.

CFR has the same obligations as FOB in terms of cargo shipment, risk transfer, import and export procedures, delivery of documents, and order payment.

CIF=COST INSURANCE FREIGHT

C. CIF (named port of destination) - cost plus insurance plus freight (...named port of destination)

Compared with CFR, CIF and CFR have the same obligations between the buyer and the seller. However, when the transaction is concluded in CIF, the seller also bears the obligation to obtain transportation insurance for the goods and pay the insurance premium. In FOB and CFR, since the buyer takes out insurance for the transportation risks it bears, it does not constitute an obligation. According to the interpretation of the "General Principles", the seller should take out freight insurance no later than when the goods cross the ship's rail. If the contract does not expressly state this, the seller may purchase insurance according to the low-liability insurance category in the insurance terms, with the minimum insurance amount being 110% of the CIF price.

2. Issues that should be paid attention to in specific business

A. The issue of demarcation of risks and expenses

The "General Principles" uses "reporting over the ship's rail" as Demarcate the boundaries of risk and expense responsibilities borne by buyers and sellers. The risk here refers to the risk of loss or damage to the goods, and the cost refers to the cost beyond normal freight. But from the actual operation point of view, shipment is a continuous process. From lifting on the shore to loading into the ship. It is impossible to divide the responsibilities of both parties along the line of ship's rail. Since the General Principles are not mandatory as a practice, the parties can stipulate otherwise in the sales contract. In actual business, the seller should provide the buyer with a "shipped bill of lading", which indicates that both parties agree that the seller shall bear all risks and expenses until the goods are loaded into the ship's hold.

B. Ship loan connection issues in the FOB method

The "General Principles" stipulate that the buyer should give the seller sufficient information on the name of the ship, the place of shipment and the required delivery time. notify.

In practice, in order to ensure that the seller prepares goods and the buyer sends a ship to receive the goods, they are connected with each other. This notification of arrival is essential. If necessary, the contract can stipulate how much time the buyer should notify the seller before the ship arrives at the port.

C. Shipment Notification in the CFR Method

In the CFR method, the seller issues a Shipment Notice to the buyer, which has the effect of notifying the buyer to apply for insurance in a timely manner. When the buyer applies for imported goods insurance, the insurance company will underwrite the goods according to the relevant shipping notice. If the seller fails to promptly notify the buyer of shipment. If the buyer fails to apply for insurance in time, the risk will still be borne by the seller if the goods are lost or damaged during transportation. Therefore, in the CFR method, the seller should pay special attention to issuing shipping notice to the buyer in a timely manner.

D. FOB in the "1941 Amendment to the Definition of U.S. Foreign Trade"

The "Amendment" divides FOB into six types, only the fifth type is delivered on board the ship at the port of shipment goods. It is similar to FOB in the General Principles, but the responsibility for export customs declaration in this term lies with the buyer rather than the seller. Therefore, when our country uses FOB to negotiate import trade with the United States, Canada and other countries, it must indicate Vessel after FOB. It should also be made clear that the other party (seller) is responsible for handling export customs clearance procedures.

E. Regarding the burden of loading and unloading costs when chartering a ship

If liner transportation is used, the liner freight includes loading and unloading costs. However, when bulk cargo is transported by chartered vessel, whether the ship bears the responsibility for loading and unloading, that is, whether the freight includes loading and unloading costs, must be stipulated separately in the charter party. Therefore, when the buyer and seller agree on the sales contract, they should make it clear who will bear the loading and unloading costs. It is usually explained by the transformation of trade terms, that is, by adding words after the trade terms.

A. The transaction is concluded on FOB basis, and it is clearly stated who will bear the shipping costs. Common deformations of FOB terms include:

FOB Liner Terms (FOB liner terms), the shipping cost is borne by the party paying the freight, that is, the buyer, according to the liner's terms.

FOB Under Tackle (FOB hook delivery), the seller is responsible for delivering the goods to the hook of the ship designated by the buyer, and the lifting costs are borne by the buyer.

FOB Stowed (FOB stowed fees included), the seller is responsible for loading the goods into the ship's warehouse and bears the loading costs including stowed fees. The handling fee refers to the cost of placing and sorting the cargo after it enters the cabin.

FOB Trimmed (FOB trimming fee included), the seller is responsible for loading the goods into the ship's warehouse and is responsible for the shipping costs including trimming fee. Leveling charges refer to the costs incurred for leveling bulk cargo entering the hold.

B. Transaction is done by CFR and CIF. It needs to be made clear who will bear the unloading costs. The deformations of CFR and CIF terms are similar. Taking CIF as an example, the main ones are:

CIF Liner Terms (CIF liner terms), the unloading fee is borne by the party paying the freight, that is, the seller.

CIF Ex Ship's Hold (CIF bilge delivery), the buyer bears the cost of lifting and unloading the goods from the bilge to the dock.

CIF Landed (CIF landed), the seller bears the cost of unloading the goods to the destination port. Includes barge and dock fees.

F. Symbolic delivery

The seller loads the goods on the ship at the port of shipment for delivery to the buyer, and then the seller goes through certain procedures (such as: document against payment, letter of credit) to When the buyer submits all qualified documents including the property title certificate (sea bill of lading), it has completed its delivery obligation. The date of issuance (or shipment) on the transport document is the "delivery date". This method is called tokenization. Sex delivery. In a contract concluded in this way, the seller is only responsible for shipment and does not need to guarantee the arrival of the goods, so it is also called a shipment contract to distinguish it from a delivery contract.

The three terms FOB, CFR, and CIF are all symbolic deliveries. Correspondingly, the buyer pays against the document, so the shipping document is of particular importance in this type of transaction.

3). Three trade terms for delivery to the carrier

1. The concept of "delivery carrier"

Delivery to the carrier There are three trade terms, they are:

FCA=FREE CARRIER

FCA (...named carrier) - delivery carrier (...named place)

CPT=COST PAY TO

CPT (... named place of destination) - freight is paid to (... named place of destination)

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CIP=COST INSURANCE PAY TO

CIP (...named place of destination) - Freight and insurance premiums are paid to (...named place of destination)

These three trade terms apply not only to sea transport and inland waterway transport, but also to air transport, railway transport and road transport. They are all nominal deliveries.

DUTY AGAINST FRONTER=DAF

DAF border delivery is suitable for various transportation methods

DES=DUTY EXCHANG AGAINST SHIP

DES Delivery on board at the port of destination is applicable to sea transportation and inland waterway transportation

DEQ=DUTY AGAINST (Q.. I forgot, sorry)

DEQ Delivery on board at the port of destination is applicable to sea transportation and inland waterway transportation

DDU= DUTY UNPAID

DDU delivery without duty paid is applicable to various modes of transportation

DDP=DUTY PAID

DDP after duty paid Delivery is available for all modes of transport