Hell, everyone, this is Gary, I am the international trade manager from Extripod. Welcome to “Extripod Academy”, This is “International Trade Basic Knowledge” Series, in this series, we will discuss the international trade rules, payment, transporation, organization, certification and country situation, i hope those knowledges can help your doing success in the international trade business.if you have any question realted those issue, you can leave comment or go to our website www.extripod.com to contact us. Our more connect as follow. If you like our channel, please also subscribe our channel. Thank!
Incoterms 2020 FOB
Incoterms describe the rules of trade. It primarily defines the allocation of all factors, risk, and costs related to the transaction between the seller and the buyer. There will be changes in Incoterms from 2020. FOB is one of the most frequently used rules in maritime transport. Let’s see what changes have taken place. For discuss FOB, we also from cost, obligation, delivery, insurance and conclusion to see those changes, OK let start learn FOB.
Incoterms 2020 FOB – Cost-sharing
what’s the seller pay the cost:
1. the seller pay the cost of export clearance;
2. the seller pay the cost of delivering the goods to the ship;
3. The seller also need pay any costs associated with damage to the goods before loading them to the vessel.
You can see those are the seller’s cost in FOB term, let see what’s cost at buyer?
What’s The buyer pay the cost:
1. The buyer pay the costs connected with the conclusion of a transport contract;
2. The buyer pay the costs related to import issues;
3. The buyer pay the costs of import clearance;
4. The buyer pay the possible costs related to damage or theft of the goods after loading the products on-board.
From the cost, the buyer and the seller sharing almost the same risk levels. Let talk about the obligation.
Incoterms 2020 FOB – Obligations.
What are the obligations of the seller?
1. The seller has to deliver the goods to the vessel at the place designated by the buyer. The seller also has to pay the costs involved.
2. Seller obtains permission to export products.
3. The seller should be fully liable for any damage to the goods before loading to the vessel.
4. Informs the buyer of all undesirable events that occur during the delivery of products to the ship.
5. Informs the buyer that the goods have been delivered to the ship.
6. The seller delivers sales notes.
7. The seller is responsible for the export clearance and related costs.
Let’s look at What are the obligations of the buyer?
1. The buyer is responsible for any damage to the goods and theft after the goods have been loaded into the ship.
2. The buyer pay the costs related to the conclusion of the transport contract and import issues.
3. The buyer need inform the seller about designated port, the name of the vessel and the delivery date.
4. Organizes import clearance and pay the associated costs
Those are the obligation for both parties. Let check the delivery issue
Incoterm FOB-Delivery of goods
The time of delivery should be deemed to be the time when the goods are loaded to the vessel designated by the buyer, on the designed date, and in the form prescribed by the port authorities.
Insurance of the goods on Incoterms
Applying FOB rule the buyer and the seller have no obligation to conclude insurance contract.
Incoterms 2020 FOB-Transport
FOB rules are used only and exclusively in maritime transport or inland waterway transport. The use of FOB is not recommended for containers transport. That’s the difference from Incoterms 2010, where FOB was also used for container transport in maritime transport.
In this case, the delivery documents are generally defined. It can be a sea waybill, or a certificate of receipt, received from the forwarder.
Inctoerm 2020- FOB Conclusion
The FOB rule applies only to maritime transport. The rule is very often misapplied because it cannot be used to container transport in new incoterm 2020,in this case, the FCA rule is recommended.
OK, until now, the FOB main content is finished. It is also means Incoterm F Group we finished. First is E group, then F group, the next time, we will discuss for C group. From CPT, CIP, CFR and end with CIF, for C Group Learn.
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A1 GENERAL OBLIGATIONS
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
B1 GENERAL OBLIGATIONS
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
The seller must deliver the goods either by placing them on board the vessel nominated by the buyer at the loading point, if any, indicated by the buyer at the named port of shipment or by procuring the goods so delivered.
The seller must deliver the goods
1. on the agreed date,or
2. at the time within the agreed period notified by the buyer under B10,or
3. if no such time is notified, then at the end of the agreed period,and
4. in the manner customary at the port.
If no specific loading point has been indicated by the buyer, the seller may select the point within the named port of shipment that best suits its purpose.
B2 TAKING DELIVERY
The buyer must take delivery of the goods when they have been delivered under A2.
A3 TRANSFER OF RISKS
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2,with the exception of loss or damage in the circumstance described in B3.
B3 TRANSFER OF RISKS
The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.
a) the buyer fails to give notice in accordance with B10; or
b) the vessel nominated by the buyer fails to arrive on time to enable the seller to comply with A2, fails to take the goods, or closes for cargo earlier than the time notified in accordance with B10;
then the buyer bears all risks of loss of or damage to the goods:
(i) from the agreed date, or in the absence of an agreed date,
(ii) from the date selected by the buyer under B10, or, if no such date has been notified.
(iii) from the end of any agreed period for delivery.
provided that the goods have been clearly identified as the contract goods.
The seller has no obligation to the buyer to make a contract of carriage.However,the seller must provide the buyer,at the buyer´s request, risk and cost, with any information in the possession of the seller, including transport-related security requirements, that the buyer needs for arranging carriage. If agreed, the seller must contract for carriage on the usual terms at the buyer´s risk and cost.
The seller must comply with any transport-related security requirements up to delivery.
The buyer must contract at its own cost for the carriage of the goods from the named port of shipment, except when the contract of carriage is made by the seller as provided for in A4.
The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer´s request, risk and cost, with information in thr possession of the seller that the buyer needs for obtaining insurance.
The buyer has no obligation to the seller to make a contract of insurance.
A6 DELIVERY/TRANSPORT DOCUMENT
The seller must provide the buyer, at the seller´s cost, with the usual proof that the goods have been delivered in accordance with A2.
Unless such proof is a transport document, the seller must provide assistance to the buyer, at the buyer´s request, risk and cost, in obtaining a transport document.
B6 DELIVERY/TRANSPORT DOCUMENT
The buyer must accept the proof of delivery provided under A6.
A7 EXPORT/IMPORT CLEARANCE
Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:
•security clearance for export
•pre-shipment inspection; and
•any other official authorisation
b) Assistance with import clearance
Where applicable, the seller must assist the buyer at the buyer´s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.
B7 EXPORT/IMPORT CLEARANCE
a) Assistance with export clearance
Where applicable, the buyer must assist the seller at the seller´s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.
Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:
• import licence and any licence required for transit;
• security clearance for import and any transit;
• pre-shipment inspection; and
• any other official authorisation.
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.
The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the good in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.
The buyer has no obligation to the seller.
A9 ALLOCATION OF COSTS
The seller must pay:
a)all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
b) the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;
c)where applicable, duties, taxes and any other costs related to export clearance under A7(a); and
d) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).
B9 ALLOCATION OF COSTS
The buyer must pay:
a)all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;
b)the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A4, A5, A6 and A7(b);
c)where applicable, duties taxes and any other costs related to transit or import clearance under B7(b); and
d) any additional costs incurred, either because:
(i) the buyer has failed to give notice under B10, or
(ii) the vessel nominated by the buyer under B10 fails toarrive on time, fails to take the goods, or closes for cargo earlier than the time notified in accordance with B10.
provided that the goods have been clearly identified as the contract goods.
The seller must give the buyer sufficient notice either that the goods have been delivered in accordance with A2 or that the vessel has failed to take the goods within the time agreed.
The buyer must give the seller sufficient notice of any transport-related security requirements, the vessel name, loading point and, if any, the selected delivery date within the agreed period.