01 Improper connection of shipping and cargo costs

 

FOB, the connection between shipping and cargo is crucial. If the container is not loaded into the port in a timely manner and cannot be loaded onto the ship, the resulting empty hold fees, demurrage fees, etc. will be borne by the shipper; On the contrary, if the goods are prepared and loaded into the container too early, the shipper will also be responsible for overdue container usage fees, storage fees, and other expenses. So FOB needs to confirm the loading date and loading port repeatedly, maintain close communication, and ensure the connection of the shipment.

 

02 Costs incurred due to unmanned pickup at destination port

 

For some reason, if the consignee fails to pick up the goods or pay the freight after the goods arrive at the destination port, the carrier will not only be unable to recover the freight in a timely manner, but also face situations such as the goods being auctioned off by local customs or incurring high storage fees. In this case, payment may first be requested from the consignee, and if unsuccessful, it may be redirected to the shipper.

 

 Sea freight: In principle, the consignee should first bear the cost. If there is no one to pick up the goods, it may be transferred back to the shipper to bear the cost;

 

 Delivery: First, notify the consignee to pick up the goods. If there is no one to pick up the goods, notify the shipper to handle it, such as returning the goods or reselling them;

 

 Destination port demurrage fees and demurrage fees: If no one picks up the goods, demurrage fees and demurrage fees may be incurred. If the goods do not meet the fees, the shipper may be required to bear them.

 

03 High designated agency fees

 

The fees provided by designated freight forwarders are often much higher than those of ordinary freight forwarders, because the consignee is designated by the freight forwarder, which is the transportation contract signed between the consignee and the freight forwarder, rather than the seller. The freight forwarder is responsible to the consignee.

 

There is no direct contractual relationship between the shipper and the freight forwarder, so there is generally no possibility of negotiation. So the designated freight forwarder will provide a series of fees for the port of origin, which will be relatively higher than that of ordinary freight forwarders. If the difference in this part is not too excessive, in order for the goods to be shipped smoothly, the shipper can only reluctantly accept the high cost standard.

 

04 Compensation costs for cargo damage

 

When damage is found during the unpacking inspection at the destination port, the consignee is generally responsible under FOB conditions. Moreover, the consignee usually purchases insurance and can apply for insurance compensation. But if it is not processed, the consignee may still negotiate with the shipper to handle it.

 

If the damage to the goods is caused by the shipper's careless packaging, inspection of the container, or other special circumstances before boarding, there is a certain responsibility for the damage, which needs to be negotiated and handled, and corresponding compensation shall be borne. If it can be proven that it is not the responsibility of the consignee, they can provide packing photos, packing lists, or other supporting documents to claim compensation from the shipowner.

 

05 Loss expenses for delivery without a bill of lading

 

Under FOB terms, compared to designated shipping companies, shippers are more likely to appoint freight forwarders. However, due to the close business relationship between the designated freight forwarder and the consignee, it is highly likely that the designated freight forwarder will directly release the goods to the consignee without collecting the original bill of lading, that is, release the goods without a bill of lading, resulting in the shipper holding the bill of lading but actually having received the full payment, ultimately causing significant losses.

 

The "Soft Pit" of the 06 Letter of Credit

 

The soft terms of a letter of credit are the terms set by the applicant in the letter of credit, which can pose a threat to the beneficiary's safe receipt of foreign exchange, and bring the applicant the initiative in transactions or the benefits of fraudulently obtaining goods and prepayments, making them covert.

 

If the shipper is not careful and the submitted documents do not match the letter of credit, payment will be refused, and after shipment, the shipper will be in a passive position, caught in a dilemma, and the payment will be damaged.

 

In export business, it is necessary to carefully choose appropriate trade terms to prevent foreign exchange risks and improve economic benefits. In the current export situation, exporters must accept FOB trade terms, which will bring more risks to exporters, especially for high-value trade. Exporters need to keep their eyes open, investigate the credit qualifications of importers, and try to minimize risks.