Free on Board(FOB) is the most commonly used incoterm in international trade. In FOB, the exporter is responsible for onboarding the consignment onto the vessel. The exporter takes care of all the fees associated with onboarding the cargo.When you get a FOB quote, you may want to know about the constituents of the FOB price. This article will walk you through all the line item charges in the FOB prices for areca palm leaf plates export and also parties involved in onboarding the areca palm products on to vessel.
This diagram shows exactly where the charges occurs in this transaction.
2) Transport company.
3) Container Freight Station (CFS)
3) Customs clearance agents.
5) Fumigation servicing company.
6) Plant quarantine Testing Authority.
7) Operators at the port terminal.
The exporter gives you the price that includes product price with packing. It is known as Ex-Factory price.
Ex-Factory price = Product + Packing (At manufacturer facility)
It is the amount exporter pays to move the goods from their warehouse to container freight station(CFS).
Consider it as a big warehouse, where customs inspection, testing, and container stuffing is done. As the cargo sitting here, CFS charges a fee for this.
CFS charges = Fee + GST.
Customs officer will inspect your consignment and will issue Let Export Order, so your shipment can be exported. Clearing agents will arrange for this inspection and charges a service fee for this.
Customs clearance charge = Service fee + GST.
Fumigation is necessary to prevent the transfer of pests, termites, and other organisms to foreign territory. The fumigation service company does the fumigation and issues a certificate. The exporter must send this certificate to the importer along with other export-related documents.
Charges = Fumigation fee + GST.
Plant quarantine organization of India does PQ testing and issues a Phytosanitary certificate. A random sample is pulled out and sent to the lab for testing to ensure that the product is pest-free.
Phytosanitary certificate charge = Testing fee.
While the consignment is sitting at the CFS, it is subjected to customs inspection and health testings. So, to inspect the packages will be randomly chosen and opened for inspection and to take a sample for testing.
The opened boxes have to be packed and sealed again before stuffing into the container.
As the name implies, it is the handling fees at the seaport.
This charge includes moving the container within the port and putting the container on the ship using cranes.
Bill of Lading fee is a documentation charge payable to the carrier at the time of releasing the Bill of Lading.
These are some other charges applicable and depends on the need at the time of export.
1) Survey charges.
2) Lashing charges.
3) Legalization charges.
4) Halting charges.
Learn more about other incoterms.
Naresh Kumar started CrozBorder Exports in the year 2017 and deals with manufacturing, consolidating and supplying eco-friendly products to global customers. Amidst various projects, he takes time to write and create awareness about a sustainable environment. He is also an active fundraiser for environmental activities. Low input organic farming, Rainwater harvesting, Eco-friendly and sustainable homes, solar cooking, and biogas are some of his other key areas of interest.