Melissa Ling {Copyright} Investopedia, 2019.Â, The Seller Pays Cost, Insurance, and Freight (CIF) to Protect Shipments, Learn About the Free Carrier – FCA Delivery Option, A Definition and Explanation of Free On Board (FOB). This may sound more expensive, but in reality, it gives you more control over the final price, since you get to choose the shipping companies, the route, the transit time and other factors that may affect the price. Importar de China en condiciones CIF, sobre todo en el caso de nuevos importadores o con poca experiencia, implica una serie de riesgos y complicaciones que hacen que el incoterm FOB sea más seguro y competitivo. Here’s a brief explanation of each contract. FOB y CIF describen acuerdos de envío al extranjero que especifican si el comprador o el vendedor son responsables de los bienes mientras están en tránsito. The seller meets cost of goods, freight and marine insurance. Có nghÄ©a là hàng chÆ°a lên tàu thì mọi trách nhiệm thuộc về người bán (seller), sau khi hàng đã lên tàu thì tất cả rủi ro, trách nhiệm chuyển cho người mua (buyer). Firstly, I need to make the definitions on each incoterms as follows. Today I would like to talk about the differences between FOB Incoterms and CFR Incoterms. FOB tiene dos ventajas principales frente a CIF. Here are some of the best virtual assistant websites out there. FOB basis is preferred by buyers who have established businesses and who can negotiate cheaper shipping and insurance contracts than what the seller would offer. FOB provides more competitive fright rates and enhanced control over shipment. The buyer might still have to pay additional fees at the port, such as docking fees and customs clearance fees before the goods are cleared. FOB vs CIF. You don’t have any control over the company used to ship your goods, or what route they use or how long it takes. FOB, or “Free On Board,” describes an agreement in which the seller is responsible for the goods until they arrive at the seller’s nearest port and are sent, or “past the ship’s rail.” Once they’re loaded and in transit, the buyer assumes all responsibility¹. FOB contracts relieve the seller of responsibility once the goods are shipped. Some companies also have special access through customs, document freight charges when calculating taxation, and other needs that necessitate a particular shipping agreement. On the other hand, when shipping CIF, the sellers or suppliers get to determine all of those things, though they also assume the cost of shipping and insurance, which are included in the purchase price of the goods under a CIF agreement³. Import Costing – FOB vs. CIF. Four rules of the 2000 version [DAF (Delivered at Frontier, DES (Delivered Ex Ship), DEQ (Delivered Ex Quay), DDU (Delivered Duty Unpaid)] were removed, and are replaced by two new rules [ DAT (Delivered at Terminal), DAP (Delivered at Place)] in the 2010 rules. Everything you need to know, Virtual assistant India: Complete guide to hiring, Emburse + TransferWise help employers reimburse international expenses, Virtual Assistant websites: Top 10 choices. Before 2010, the term was defined informally, but it is now defined as the point in the transaction wher… 3https://www.shiplilly.com/blog/advantages-shipping-fob-over-cif/. If anything goes wrong, you have a point of contact within the shipping company to get it fixed. A seller with expertise in local customs that the buyer lacks would likely assume CIF responsibility to encourage the buyer to accept a deal, for example. sea shipping. However, once freight volume grows or when the number of shipments grows, CIF starts to pose difficulties and this is when importers prefer FOB. For importers who are cost sensitive, FOB is often the first choice. If you want to know the valuation method for a particular destination, you can always find out from our Countries page. These are all great questions. Cost and freight (CFR) is a trade term obligating the seller to arrange sea transportation to a port of destination and provide the buyer with the documents necessary to obtain the goods from the carrier. FOB vs FCA In international trade, buyers and sellers enter into agreement beforehand so as to avoid any confusion once the process of transportation of goods has started. Si los bienes sufren algún desperfecto en una de las etapas mencionadas anteriormente, es el vendedor quien responde. When you buy internationally and two currencies are involved, there can be hidden costs in the exchange rate used to convert the payment for the goods. Valuation methods differ for each country. This is because the seller uses a forwarder of his or her choice who may charge the buyer more in order to increase the profit on the transaction. El término FOB exige al vendedor despachar la mercancía en aduana para la exportación. 2http://smallbusiness.chron.com/difference-between-cif-fob-39152.html We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. how to make your first transfer with TransferWise, Virtual assistant Philippines: Complete guide to hiring, Virtual assistant services: 100 tasks to outsource right now, What is a Virtual Assistant? Method more convenient for both parties is ultimately going to make your first transfer with TransferWise port shipment... 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