FOB Term is Common Uses

There are several trade terms could buyer taken for their shipment besides FOB. But, why do they choose only FOB?

FOB is one of the trade terms, which buyer or shipper will covers the cost of shipment from on board at the port of loading until they receive the goods at their warehouse. Shipper or beneficiary only has the obligation to send the goods to the port and pays all the cost until, the clearance cost included.

There are two reasons why does they always choose FOB:

1. Getting the fixed cost.
When the shipment term is FOB, buyers will freely finding the forwarder out and compare one to each other. They make an agreement for a certain period. They also will get the fixed warehouse during clearance process, then, of course, by this condition, they will get lower cost because they promise to place all their goods in a certain warehouse. Usually they are getting a special rate because all the party can get the fixed job.

2. Getting the fixed lead time.
Deadline is the second major factors that shipper has to keep in time. Because buyer has prepared the market, the distribution, and the time of the goods on sale. Buyer wants to control all the things to make all are going smoothly. By taking FOB trade term, buyer will be able to control whether the goods has been on boarded or not.

3. Checking the cargo readiness.
Buyer could also checks the goods via forwarder for schedule agreed. Sometimes buyers in doubt when they received an information about cargo readiness. Buyer usually ask forwarder to check the goods with shipper. Forwarder will ask the shipment booking for a certain on board date. By doing so, buyer could get the the fixed schedule.