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Contract terms accepted in International Trade :
1- Fas free Alongside Ship
2-Fob Free on Board
3- C & F Cost and Freight
4-CIF Cost Insurance Freight
The fav.ourit form me which one will be applicable of trade ,Materials select and get the benefit and profit.
if it is from a third world country i would preferre cif a long with sgs,or veritas inspection.
if it is from europe ,if it is fcl i would usually accept fob. LCL i like ex works. my forwarder will take care of it.this way i can order the amount of goods i need with no pressure.
usa i always get fob.
There are a lot of factors which control your choic of incoterm which have to be vizualized before taking the decision. Usually the seller will add up the various costs you requested to the product including a margin above and over. As such, I have the the advantage of getting some of the services/risks done by others without affecting the delivery schedule I would go for it since it will result in some savings in time/money i.e. if I have very good rates for shipping, insurances, internal transport...Etc. Once this analysis is done I will decide on the required method before launching the bid and state my choice in the tender document. If no advantage exist I would go for DDP.
The shipment terms will be finalised based on the commodity and terms will be added in Supplier agreement.
Low risk products: Get quotation FOB , we can reduce the logistics cost
DDP or DAP because in this case the exportor will be responsible of the operation from packaging untill delivery including shippement and customs clearence
I would prefer FOB as I will have much reduced pricevon shipping. Supplier for sure shall add his margin over that too.
Also we have control and track of thr shipment and possibly a rapo with the shipper.
Talking about international trade, it's a matter of accuracy. I mean, in case transport is terrestrial (truck or railway) it's quite easy to estimate transport fees, therefore supplier can offer a CIF, CIP or C&F price. In the same time, buyer has usually enough knowledge about unloading and customs costs. In case transport is maritime, such prices are more difficult to estimate and a discussion between buyer and seller is recommended, because the mutual goal is to minimize transportation costs. It may happen that buyer has a very good relationship with a shipping company and gets good conditions may be obtained. In such case, FOB should be preferred. I would not recommend FAS, unless buyer has a trustworhy agent in the port of loading. As a matter of comfort, both buyer and seller should deal with the cost and other issues that are born on their territory. It is also important to specify in the contract whether condition is FIFO, LIFO, etc, that meaning the exact extent of obligations are known.
Usually, seller will avoid an offer DDP, based on the comfort criteria above mentioned.
I would prefer CIF, i.e. Cost Insurance and Freight. It would at face value appear to be expensive, but in the case of an eventuality, I would be well covered and guaranteed of receiving my product in good condition.