FOB là gì? Hiểu chi tiết về giá FOB trong xuất nhập khẩu hàng hóa

What is FOB? This is a common term in international trade. This is one of the widely used Incoterms terms. This clause appears in international goods sales contracts. FOB stipulates the responsibilities and costs to be borne by the buyer and seller. Understanding FOB is important in today's global business landscape. This knowledge helps businesses save costs and minimize risks. In addition, it also helps optimize logistics processes and supply chain management. So what important characteristics does FOB have? Let's find out the details in this article.

FOB concept

FOB stands for “Free On Board” or “Freight On Board”. This is a common delivery term in international trade. This condition stipulates that the seller's responsibility ends when the goods are on board the ship. Before the goods are shipped on board, the entire responsibility belongs to the seller. However, once the goods have arrived on board, all responsibility and risk will be transferred to the buyer. The risk transition point is the ship's rail at the port of departure.

What is the concept of FOB in international trade?

FOB price does not include shipping costs and insurance costs. This means that the buyer must bear the transportation rental fee and cargo insurance costs. In addition, the buyer also has to bear other additional costs. On the contract, the name of the loading location will be attached along with “FOB”. This is also where risk is transferred from seller to buyer. Please note: FOB prices do not include charges related to ocean freight and ocean insurance.

For example: A person buys goods in Singapore and imports them to Vietnam. They need to go through Da Nang port. They will then need to pay for shipping costs. In addition, businesses must also purchase insurance for shipments during transportation. This means all shipping and insurance costs will be the responsibility of the buyer.

What is the formula for calculating FOB?

To calculate the FOB price, it is necessary to determine the specific costs from the point of origin until the goods are loaded on the ship's deck. First of all, FOB price includes: product price at the seller's factory or warehouse. Then, add the cost of packaging and preserving the goods before shipping.

Next, calculate the cost of transporting the goods from the factory or warehouse to the port of origin. In addition, it is necessary to calculate the cost of export customs procedures in the country of origin. This fee includes taxes, fees and charges related to the export process. The cost of loading and unloading goods onto the ship at the port of departure must also be included in the FOB price.

To be more concise, we have the following formula. FOB price = costs related to transporting goods to the port of shipment + fees for loading goods onto shipping vessels + fees for export procedures + taxes and other costs incurred before the goods are loaded onto the ship .

To calculate the FOB price, it is necessary to determine the specific costs from the point of origin until the goods are loaded on the ship's deck

More specifically, the detailed formula is as follows. FOB price = Finished goods price + Container lifting fee + Customs declaration opening fee + Domestic container towing fee + Fee for applying for certificate of origin (if required) + Quarantine fumigation fee + Maintenance fee.

Another important factor is the cost of inland insurance (if any) from the factory to the port of origin. All of these costs will be combined to form the FOB price.

Responsibilities of the buyer and seller in the FOB contract

In a FOB (Free on Board) contract, the responsibilities of the buyer and seller are clearly divided according to the stages of the goods transportation process. So what are the responsibilities of the buyer and seller in a FOB contract?

Responsibility of the seller

In a FOB (Free on Board) contract, the seller is largely responsible for ensuring the goods are properly prepared and delivered. First of all, the seller must prepare and package the goods according to the committed specifications and standards. They need to use appropriate packaging to protect the goods and comply with special packaging requirements where applicable. Ensuring packaging quality is an important step to avoid loss and damage during transportation.

Once the goods are ready, the seller ships the goods to the designated export port. This is an important part of their responsibilities. This section also requires effective logistics management and domestic transportation coordination. When the goods arrive at the port, the seller is responsible for loading the goods onto the ship. This process includes costs and risks associated with loading and unloading goods. Everything needs to be secured so that the goods are handled carefully to avoid damage.

What are the seller's responsibilities in a FOB contract?

The seller also takes care of all customs procedures necessary for export. That is to open a customs declaration and provide all relevant documents. This is a necessary procedure for goods to be legally cleared through customs. Costs before the goods are placed on the ship are also borne by the seller. This includes container handling fees, certificate of origin application fees if required, quarantine fumigation fees, and maintenance fees.

Responsibility of the buyer

In FOB contracts, the buyer's role is very important. It doesn't just stop at receiving goods. Buyers need to ensure goods are delivered to the final destination safely and on time. This includes many steps. That is choosing the means of transportation, paying shipping and insurance costs, handling customs and import procedures. They also have to arrange and transport goods from the port to the warehouse.

First, the buyer must choose the appropriate vehicle and shipping company. In addition, the vehicle needs to meet the special transportation requirements of the goods.

Second, the buyer must pay the costs related to transporting the goods from the port of export to the port of destination. This includes shipping and insurance fees. This fee applies if it is necessary to ensure the safety of the goods. This requires accurate cost calculations and timely payments as agreed in the contract.

What are the buyer's responsibilities in an FOB contract?

Third, the buyer must undertake all customs and import procedures when the goods arrive at the port of destination. It includes opening customs declarations and paying import taxes. They also need to complete relevant paperwork to ensure the imported goods are legal. Finally, the buyer is also responsible for arranging and receiving the goods at the port of destination. They then transport the goods from the destination port to their warehouse.

Terms related to FOB

In international shipping and contracts, related terms are intended to clearly define each section of responsibility and associated costs. This helps ensure accuracy in sales transactions. Let's learn what terms related to FOB are.

FOB Destination:

• The seller is responsible for shipping the goods to the destination.
• The seller is responsible for the goods until they are delivered to the buyer.
• Buyer pays the cost from port to destination and related fees.

FOB Shipping Point:

• Buyer is responsible for shipping from port to destination.
• The buyer is responsible for the goods from the time they are loaded onto the ship.
• Buyer pays shipping and related fees.

FOB Charges:

• Loading and unloading costs, port services and transportation.
• Includes loading and unloading fees from the ship, port fees, delivery, and packaging.
• Other costs related to transportation are also included.

FOB Origin:

• Equivalent to FOB Shipping Point terms.
• Buyer is responsible for shipping from port to destination.

FOB Bill of Lading:

• Documents transporting goods from port to receiving point.
• Issued by the carrier.
• Confirms shipping and can be used for payment.
• Represents the transfer of ownership of goods.

FOB terms are intended to clearly identify each section of responsibility and associated costs

Distinguish between FOB and CIF

We now understand what the concept of FOB is. There is a concept that is often confused with FOB, which is CIF (Cost, Insurance, Freight). Both of these concepts are international trade terms. They determine when and where responsibility transfers from seller to buyer.

Each condition has different responsibilities and costs. The distinction between FOB and CIF not only affects the way transactions are done, but also involves the management of risk and finance in the supply chain. To better understand the difference between FOB and CIF, we need to analyze both in more detail.

What is CIF?

Cost, Insurance, Freight (CIF) is an international trade term. CIF determines that the seller is responsible for transporting the goods to the destination port. The seller must also purchase insurance for the goods throughout the journey. Shipping and insurance costs are included in the selling price. Under CIF terms, the seller pays the freight costs. The seller is also responsible for any loss or damage that occurs before the goods are delivered. Goods are considered delivered when they pass the ship's rail at the port of export. This has similarities with the concept of what FOB is.

The buyer is only responsible from the time the goods arrive at the destination port. Buyer pays the costs from port to warehouse or final location. CIF is often used for sea freight. CIF helps buyers avoid shipping and insurance risks. The seller bears the risk until the goods pass the ship's rail. This reduces the management burden for buyers. CIF also requires the seller to arrange shipping and insurance. The seller is responsible for issuing shipping documents to the buyer, which is a prerequisite for receiving goods at the destination port.

CIF determines that the seller is responsible for transporting the goods to the destination port

In short, CIF is an international trade condition. It places the responsibility of shipping and insurance on the seller. CIF helps buyers reduce risks and management work. This condition is common in international transactions, especially by sea.

Similarities between CIF and FOB

Both the terms CIF (Cost, Insurance, Freight) and FOB (Free on Board) are two concepts in international trade. They are all applied in effective international sales transactions. So what is the difference between CIF and FOB?

FOB indicates that the seller is responsible until the goods are loaded onto the ship at the export port. The buyer will then have to pay shipping costs, insurance and bear risks from the export port to the final destination. This condition usually applies when goods are transported by sea.

Meanwhile, CIF terms require the seller to be responsible for transporting the goods to the destination port. They must also buy insurance for the goods throughout the transportation process. Shipping and insurance costs will be included in the selling price. The buyer only has to assume responsibility from the time the goods arrive at the destination port. They then pay the associated costs from the port to the warehouse or final receiving point. CIF is often applied when goods are transported by sea and helps buyers reduce risks and management work.

Both the terms CIF and FOB are two concepts in international trade

In short, both conditions are important in international trade. These two concepts help clearly define shipping responsibilities, insurance and costs between seller and buyer.

What is the difference between CIF and FOB?

The main difference between CIF and FOB in international trade lies in the responsibility and shipping costs. Specifically:

CIF:

• The seller is obliged to ensure that the goods are delivered to the destination port.
• The seller purchases insurance for the goods throughout the journey.
• Shipping and insurance costs are included in the selling price of the goods.
• The buyer is responsible from the time the goods arrive at the destination port.

FOB:

• The seller is responsible for the goods until they are loaded onto the vessel at the port of export.
• Buyer is responsible for shipping and insurance from the port of export to the destination.
• The buyer bears all risks and costs after the goods pass the ship's rail.

The main difference between CIF and FOB lies in the responsibility and shipping costs

Thus, CIF places more responsibility on the seller. Thereby, it helps buyers reduce risks related to shipping and insurance. Meanwhile, FOB gives buyers more control over shipping and insurance. However, that means they have to bear higher risks during transportation.

Conclude

Above is a sharing of what the concept of FOB is, and also helps you distinguish many different concepts related to international trading transactions. Don't forget to explore other interesting related information below.

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