The evolution of FOB terms: From ships rail to onboard

I remember when I first entered the industry, the veterans always said FOB is based on the ships rail, a statement that actually originated from the 2000 version of Incoterms. NowIncoterms? 2020has long changed the risk transfer point to goods loaded on board, a detail change that has confused many oldforeign tradeIn actual operation, the costs that the exporter needs to bear are far more than just the cost of the goods. They mainly include three categories:

FOB cost list: A more complex cost structure than imagined

Domestic - section logistics costs

• : The transportation cost from the factory to the port (including pick - up fee, fuel surcharge, etc.). We once calculated that this part can account for 15% - 25% of the total costCustoms - clearance related costs
• : Customs declaration fee, commodity inspection fee, fumigation fee (necessary for wooden packaging),fee, etc. Special reminder: For the export of hazardous chemicals, a dangerous goods declaration fee also needs to be paidIt is recommended to verify through the following methods:Port operation fees
• : THC (Terminal Handling Charge), document fee, seal fee, port construction fee, etc. These fees are like Russian nesting dolls. If youre not careful, new charging items will pop up: THC (Terminal Handling Charge), documentation fee, seal fee, port construction fee, etc. These fees are like Russian nesting dolls, where new charges may appear if youre not careful.

The tricks in freight forwarding fees: The difference traps between FCL and LCL

charging tonnageof LCL goods. The freight forwarder charged according to the measurement ton, while the actual weight ton was lower. Just this item alone resulted in an overcharge of 23% of the fees. Heres a practical tip:FCL: Focus on fixed charges such as THC, document fee, seal fee, etc.

• LCL: Be vigilant about hidden costs such as CBM conversion, destination port devanning fee, warehousing fee, etc.
• It is recommended to require the freight forwarder to provide a

detailed quotation sheetOur teams Freight Forwarder Fee Verification List has helped clients recover an average annual over - expenditure of 120,000 yuan.In 2018, for a batch of mechanical equipment with a value of 800,000 US dollars, due to the failure to clearly agree on the

The pits weve fallen into over the years: A warning record of FOB practical operation cases

pre - shipment inspection feebearer, the seller finally paid an additional 12,000 US dollars. More typical cases are:Case 1: Failure to agree on the

• over - time waiting fee. The delay in loading at the factory resulted in an additional cost of 5,800 yuanTrailerCase 2: Ignoring the port congestion surcharge, the shipping cost in the peak season increased unexpectedly by 15%
• Case 3:
• Request for a clean on - board bill of lading. The bank refused payment because the freight forwarder missed typing the words on board,L/CRequesting clean on board bill of lading, but the freight forwarder omitted the on board notation, leading to bank refusal of payment.

Three magic weapons for cost control: The practical experience of a 20 - year - old foreign trade professional

Contract refinement

1. : In the sales contract, clearly list the cost list of including but not limited to. It is recommended to attach the Local Cost Appendix,: Clearly specify in the sales contract a list of fees including but not limited to, and it is recommended to attach a Local Fee Appendix.
2. Retain third - party notarized samples (retain 3kg of metal samples per batch)Establish a quotation system for at least 3 freight forwarders. The <Maritime TransportationCost Comparison Table> we developed can visually display price differences.
3. Dynamic monitoringSet up a price early - warning mechanism for variable costs such as THC and bunker adjustment factor.

Recently, we helped a lighting export enterprise optimize its processes. Through theMonthly Cost Analysis Meetingsystem, the logistics cost was reduced by 18% within half a year.

New changes introduced by Incoterms? 2020

Under the new version of trade terms, FOB sellers also need to pay special attention to:

• Shipment safety requirements: It is necessary to ensure that the goods meetIMDG Rulessuch transportation safety standards
• Electronic information obligations: Now it is required to provide electronic transport documents.
• Insurance issues: Although it is not mandatory, it is recommended to purchasedomestic - section cargo insurance

Last year, a customers goods encountered a typhoon while waiting for shipment at the dock. Fortunately, the domestic - section insurance was purchased, and finally 85% of the losses were compensated.

After all, FOB is like playing chess. Behind the seemingly simple rules, there are countless tactical changes. Mastering the cost details is just the basic skill. Real experts know how to build a three - dimensional defense line in contract terms, freight forwarder management, and risk prevention. Before the next shipment, you might as well take out this checklist and check item by item. Perhaps you can find cost - optimization space that you have never noticed before.