What costs are to be borne by the consignor under FOB terms?

We all know that FOB (Free On Board), also known as FOB, means delivery on board at the port of shipment. In a FOB transaction, the buyer is responsible for sending a ship to receive the goods, and the seller shall load the goods onto the ship designated by the buyer at the port of shipment and within the specified period of time, and notify the buyer in a timely manner. When the goods are loaded on the designated vessel at the port of shipment, the risk is transferred from the seller to the buyer.

So what costs are to be borne by the consignor under FOB terms?

Regular Fees 
Under FOB conditions, the consignor is generally responsible for the port-of-origin charges, i.e. pre-shipment charges, including: pick-up charges, packing charges, miscellaneous port charges, port security charges, bill of lading charges, manifest entry fees, terminal handling charges (THC) or origin surcharges (ORC), seal fees, customs clearance fees, etc. Special attention is paid to the U.S. AMS, the European Union's ENS and other manifest declaration fees, because they are declared before loading at the port of origin, then these costs also belong to the "offshore" costs incurred before, generally should be borne by the consignor. Of course, the customer promised to bear this part of the cost of the exception.

Fees for unforeseen circumstances
1.The cost of improper connection of ship and cargo
FOB, ship and cargo connection is the key. If there is no timely loading of containers into the port on the ship, then the resulting empty cabin fees, demurrage, etc. will be borne by the consignor; conversely, the preparation of loading containers too early, overdue boxes to make fees, storage fees, etc. is also to be borne by the consignor. So FOB for the shipment period and port of shipment to confirm again and again, to maintain close communication, to ensure that the ship and cargo connection.

2.Costs arising from unmanned pickup at the port of destination
For some reason, the consignee does not pick up the goods or pay the freight after the goods arrive at the port of destination. In this case, the carrier cannot recover the freight in time, but also faces the situation that the goods will be auctioned by the local customs or incur high storage fees. Therefore, it may first request payment from the consignee, and then turn to the consignor when there is no result. 

Sea freight: in principle, the consignee should first bear, when no one picks up the goods, then it may be transferred back to the consignor to bear;
Pick-up: Firstly, notify the consignee to pick-up the goods, when no one picks-up the goods, notify the consignor to deal with it, such as shipping back or reselling;
Destination port demurrage and demurrage charges: when no one picks up the goods to produce demurrage and demurrage charges, the goods do not cover the cost, the consignor may be required to bear.

3. High designated agent fees
Designated freight forwarders often give fees that are often much higher than those of ordinary freight forwarders. This is because the freight forwarder is appointed by the consignee, that is, the consignee enters into a contract of carriage with the freight forwarder, not the seller. Freight forwarders are responsible for the consignee. There is no direct contractual relationship between the consignor and the freight forwarder, and generally there is no possibility of bargaining. So the designated freight forwarder gives a series of fees for the port of origin will be relatively higher than ordinary freight forwarders. This part of the difference, if not very excessive, in order to send the goods smoothly, the consignor only painfully accept the high cost standards.

4.Compensation for damage to goods
When the port of destination open box inspection, found that the goods damage, FOB conditions under the general situation of the consignee to take responsibility. And the consignee generally bought insurance, you can apply for insurance coverage. But if not, the consignee may still negotiate with the consignor to deal with.
If the cargo damage is caused by the consignor packaging, inspection of the cabinet is not careful or other special circumstances before the ship, the cargo damage is a certain degree of responsibility, need to negotiate, bear the corresponding compensation. If you can prove that it is not the responsibility of their own party, you can take out the packing photos, packing list or other supporting information, so that the consignee to the ship's claim.

5. Losses without order release
Under the FOB terms, the consignor is more likely to appoint the freight forwarder compared to the appointed shipping company. But because the designated freight forwarder usually maintains a close business relationship with the consignee, so the designated freight forwarder is very likely in the case of not recovering the original bill of lading will be put directly to the consignee, that is, no single release of goods, resulting in the consignor although holding the bill of lading, but in fact, has been empty, ultimately causing significant losses.

6. Letter of Credit
Soft terms of letter of credit are the terms set by the issuer in the letter of credit, such terms can lead to the beneficiary's safe collection of foreign exchange is threatened, while the applicant to bring the initiative of the transaction or fraudulent goods and prepayment benefits, with hidden.
If the consignor does not pay attention and submits documents inconsistent with the letter of credit, payment will be refused, and the consignor will be in a passive position after the shipment, in a dilemma, and the payment for the goods will be damaged.

Written by Vivi