Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. The terms are also used for inland and air shipments. CIF is considered a better way to buy goods for those who are new to international trade. It might also be a better option for new traders who have small cargos. In CIF, the seller is responsible for transporting goods to the nearest port, loading the goods on the ship and paying freight for the goods to be delivered to a port chosen by the buyer.
The seller is also responsible for paying insurance for the goods. It is better to buy FOB for those who are already familiar with international trade. These traders have their own forwarding agents and logistic agents in place at the port where the buyer loads the goods to be imported. In FOB trading, the seller is only responsible for taking the goods to the nearest port on his or her end.
This location is indicated after FOB, and it is important to accountants, as goods become assets to the buyer on the day they reach that location. An importer must look into the options of buying the goods under the terms that are more favorable to his or her expenses. However, risk is transferred to the buyer once the goods are loaded on the ship. The seller must clear the goods for export. Maritime transport only but NOT for multimodal sea transport in containers. Importers generally buy CIF if they are new in international trade or they have very small cargo.
Your supplier is responsible for arranging the freight and insurance details. Handling freight may be too detailed or complicated for a new importer, therefore they simply let their supplier deliver the product to them. It is an easy way of bringing the cargo from point A to point B without dealing with details but with a higher cost. Why CIF might cost you more? The vendor often will work with his own forwarder and mark up the cost offered from his forwarder as an additional way of making profit.
Having CIF terms might not work for you when you start buying more. As the number of CIF shipments increase, more problems can occur, since obtaining accurate shipment information becomes more difficult. Overseas suppliers might not help you on a timely manner to handle service issues that might develop in transit.
Their responsibility ends on destination port and for any problem, you may have to bear extra demurrage, per diem or unexpected shipping related costs. Logistics and Environment: Why does your company need to invest in Sustainability?
Leave a Reply Cancel reply Your email address will not be published. Each specifies which party is responsible for goods in transit, what insurance is required and who pays freight charges.
The shift of responsibility from seller to buyer is considered delivery even though the goods may still be in transit. With the FOB type of shipping agreement, the seller or shipper arranges for goods to be moved to a designated point of origin. However, FOB contracts are also used for inland and air shipments. Delivery is accomplished when the seller releases the goods to the buyer.
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