What does FOB mean?

FOB quotation, also known as "FOB", is one of the commonly used trade terms in international trade.

FOB (acronym FOB), for transactions conducted on the basis of FOB, the buyer is responsible for sending a ship to pick up the goods, and the seller loads the goods on the ship designated by the buyer at the port of shipment stipulated in the contract and within the specified time limit, and informs the buyer in time. When the goods are loaded on a named vessel at the port of shipment, the risk passes from the seller to the buyer.

At present, most domestic factories use one-time quotation, because the trailer and customs declaration fees are relatively fixed, and the sea freight is floating, so there is a certain time from production to shipment, and the freight is borne by the buyer, so the factory can avoid the unexpected risks that may occur in the floating process of sea freight.

Simply put, it is to buy equipment from abroad. The seller only sends the equipment to the port of their country, and the rest of the freight and insurance fees from abroad to China are paid by himself.

Trade terms in international trade, also known as price terms.

In international trade, the obligations of buyers and sellers will affect the price of goods. In the long-term international trade practice, some trade terms closely related to price are gradually linked to price, forming several quotation modes.

FOB domestic expenses:

1, processing and finishing costs;

2, packaging costs;

3. Storage expenses (storage/rent, fire insurance, etc. );

4. Domestic transportation costs (warehouse to wharf);

5. Certificate fee (including commodity inspection fee, notary fee, consular visa fee, certificate of origin fee, license fee, storage fee, etc.). );

6. Freight (freight, lifting fee and barge fee, etc.). );

7. Bank charges (discount interest, handling fees, etc.). );

8. Estimated loss (loss, shortage, leakage, damage, deterioration, etc. );

9. Posts and telecommunications fees (telegram, telephone, telegram, fax, email, etc.). ).

FOB price terms:

In international trade, ports and docks are used as delivery places, so there are three most important price terms:?

1. Delivered at China Wharf: called FOB.

For example, delivery at Shanghai Port is called FOB Shanghai. In this way, in addition to the value of the goods themselves, you have to add the freight for transporting the goods to the Shanghai terminal, the customs declaration and export fees and the miscellaneous expenses incurred in the Shanghai terminal. This is the total cost price. FOB is the most basic price.

Simple formula: FOB = price of goods+domestic freight and miscellaneous fees?

2. Delivery from overseas terminal: CNF?

For example, it is called CNF, and new york agrees to deliver the goods at the port of new york. In this way, in addition to the FOB price, the freight and miscellaneous fees for the goods to be shipped to new york, USA are added. ?

Simple formula: CNF = FOB+ sea freight?

3. Deliver the goods at foreign docks, and at the same time buy insurance for the goods to avoid damage on the way: this is called CIF.

The agreed delivery at new york Port is called CIF new york, which means adding a little insurance premium on the basis of CNF price. The cost of insurance premium is determined by the insurance company, which varies slightly according to the type of goods and the place of delivery. ?

Simple formula: CIF = FOB+ sea freight+insurance premium.

Each mode stipulates the obligations of buyers and sellers under specific trade conditions. The terms used to describe this obligation are called trade terms.

Terms of trade expressed in trade terms are mainly divided into two aspects:

1, indicating the price composition of the goods, and whether it includes the main ancillary expenses other than the cost, namely freight and insurance;

2. Determine the delivery conditions, that is, explain the division of responsibilities, expenses and risks between the buyer and the seller in the delivery of goods.

In international trade, trade terms are very important to express prices.

The use of trade terms in the quotation clearly stipulates the responsibilities, expenses and risks that both parties should bear, and explains the price composition of the goods. Thereby simplifying the procedure of transaction negotiation and shortening the transaction time.

Because the international practice of stipulating the terms of trade gives a complete and accurate explanation of the obligations of buyers and sellers, some disputes that may arise due to different understandings of the terms of the contract during the performance of the contract are avoided.

Extended data:

Some countries encourage the use of CIF terms for export and FOB terms for import, which are insured or carried by domestic insurance companies and carriers.

According to the interpretation of Incoterms 2000, FOB terms are only applicable to maritime and inland waterway transportation. FOB fob price (? . ? Designated port of shipment)

"Free on board (? . ? "named port of shipment" refers to the risk that the goods cross the ship's rail at the named port of shipment (according to INCOTERMS 20 10). FOB clause requires the seller to go through the customs clearance procedures for goods export.

This term is only applicable to sea or inland waterway transportation. If both parties do not intend to deliver the goods to the ship, FCA terms should be used.

References:

Baidu Encyclopedia -FOB (trade term)