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FOB Shipping from China: The Definitive Guide

Are you planning to use FOB shipping from China to any global destination?

Well, I will show you how to have a peace of mind when importing from China using FOB Incoterm.

The best part?

Today’s guide will take you through the basic definition, advantages, FOB shipping options, how it works, etc.

It doesn’t matter whether you need FOB Shanghai or FOB Shenzhen – this guide covers everything you need.

Let’s start right away.

Chapter 1: What is FOB Shipping from China?

FOB shipping from China refers to an Incoterm used in international shipping.

The use of FOB specifies the point at which the risk and cost transfers from your supplier to you the buyer.

This is important in ensuring the safe shipment of your goods from China.

So, let me break down for you what FOB means.

F for “Free” refers to your supplier’s responsibility during the shipping process.

“On Board” refers to when the goods are on carrier ready for shipment.

This implies that your suppliers are free of the responsibilities once they load the goods into a carrier.

Chapter 2: Advantages of FOB Shipping from China

There are several benefits that you can gain by using FOB shipping from China.

As an importer, you need to identify these benefits.

They include the following:

§ Control of your shipment

The use of FOB shipping from China gives you maximum control over your shipping.

By doing this, you can select your carrier while at the same time closely monitor your goods during shipment.

§ Costs

FOB allows you to minimize your expenses during the shipment process better.

By having control of your shipment, you can select a carrier that is affordable and who can serve you better.

You can, therefore, bargain with several carriers and even insurance companies to get a favorable deal.

§ China customs clearance

We all understand how it can be difficult to clear your goods in China especially if you are not familiar with the procedure.

However, you don’t have to worry when you are using Fob shipping from China.

This is because your seller will handle the Chinese clearance process for you.

Chapter 3: Disadvantages of FOB shipping from China

However, you will encounter the following disadvantages when using FOB shipping from China.

§ Onboard risks

Remember, once the goods are on board the carrier, the responsibility of the cargo passes to you.

This includes handling the risks associated with the shipment.

Risks can cause you dearly if you don’t take and insurance cover for your good during the shipment period.

§ Destination customs clearance

You will have to take charge of the customs clearance in your port of destination.

This can be challenging if you don’t understand the customs clearance procedure of your country.

It can also be a challenge if you hire a forwarder who is not conversant with the customs clearance procedure.

To avoid this, always ensure that you employ a forwarder or a customs broker who understands the clearance procedure in your country.

Chapter 4: Key Considerations in FOB Shipping from China

There are several factors that you need to consider when using FOB shipping from China.

These factors will help you in ensuring convenient FOB shipping of your goods from China.

It doesn’t matter whether you need FOB Shenzhen or FOB Shanghai, it applies to whichever situation at hand.

Among the factors to consider include:

§ Insurance cost

Since you will be responsible for the goods once they are on board, you will have to factor in the insurance cost for your goods.

This is important since it will cover your goods against any risk that might occur during the shipment process.

§ Contract details

As you will see later on, different terms can be on your FOB contract which will change its implementation.

Before committing on a particular FOB contract, you will need to analyze these terms.

Such terms may indicate the point where responsibility shifts from your supplier to you.

Also, it may show the party responsible for specific duties.

Chapter 5: How FOB Shipping from China Works

By now you might be asking yourself how FOB shipping from China works.

It doesn’t matter whichever place you are shipping from in China. You could wish to go to FOB Shanghai or FOB Shenzhen.

Actually, to understand how FOB works, you need to know the responsibilities of parties to the FOB shipping from China.

This section discusses how FOB shipping from China works by looking at the responsibilities or the buyer and the seller.

Buyer’s Responsibility in Shipping from China

The buyer, in this case, refers to you who is shipping your goods from China.

Among the responsibilities that you will handle during FOB shipping from China include:

§ Bearing the shipping risk

It is your duty as a buyer to bear the risks that might occur on your goods during the shipping period.

To minimize these risks, you need to take an insurance policy for your goods.

A reliable freight forwarder will be able to offer you competitive insurance rates for your goods.

§ Unloading cost

You must pay for the cost of unloading your goods at your port of destination.

Unloading involves removing your goods from the carrier once they arrive at your port of destination.

§ Paying for the FOB invoice

Once you receive your goods, it is your responsibility to pay for the cost of the invoice of your goods.

Your supplier will provide this invoice for you to make the payments.

§ Booking space for your goods.

You will be responsible for booking space on the carrier for the shipment of your cargo.

This is where the services of a forwarder come in handy.

Since they have the knowledge and networks, they will be able to offer the best deal for the shipping space of your cargo.

§ Paying for your cargo

Lastly, you will have to pay for the goods since they are yours.

You will do this as per the agreement you have with your supplier.

Seller’s Responsibility in Shipping from China

On the other hand, your seller refers to the entity that you will be purchasing your goods from in China.

To facilitate your FOB shipping from China, your seller will handle the following responsibilities:

§ Transport logistics for your goods

It is the responsibility of your supplier to organize and for and transport your goods from their premises in China.

They will use different means to transport your goods to the port of origin in China.

§ Terminal handling cost

When your goods arrive at the port of origin in China, your supplier will pay for the loading cost of your goods to the carrier.

Loading needs to consider the safety and nature of your goods.

As such, the more complex handling of your cargo during loading is, the higher the loading cost for your supplier.

§ Documents fee

It is the responsibility of your supplier to pay for the cost of producing the relevant documents for shipping your goods.

Such documents include the commercial invoice, the packing list, and a certificate of conformity.

§ Bearing certain risks

Your supplier will handle the risk occurring as a result of transporting your goods from their warehouse to the port of origin.

§ Customs clearance charges

Before shipping of your goods from China takes place, they will have to go through the customs clearance process.

To facilitate this process, your supplier may have to engage the services of a customs broker.

Your supplier will bear all the cost that arises from the customs clearance process as well as the cost of the customs broker.

§ License permits

Certain goods will require licenses before shipping out from China.

Your supplier has to have these permits and to pay for them before importing.

You may fail to ship your goods from China if they don’t have such permits.

Chapter 6: How to do FOB Shipping from China.

FOB shipping from China is actually pretty simple after you have understood the roles of each party in the contract.

Here is how you go about doing FOB shipping from China.

FOB shipping from China starts by you identifying a supplier for your goods in China.

There are various ways that you can identify your supplier.

However, you need to be satisfied with your supplier before agreeing on the importation of your goods.

Once you have identified your supplier, you will go ahead and sign a FOB shipping contract with them.

Your supplier will then commence the process of shipping your goods through FOB shipping from China.

They will organize for loading of your goods onto a carrier for transportation to the port of origin in your China.

At the port of origin, they will unload from the carrier and handle the customs clearance process in China.

They will then proceed to load the goods into a carrier ready for shipment.

The responsibility of your supplier ends once they load the goods into the carrier ready for shipping from China.

You will then be responsible for all the cost from there including the cost of hiring the carrier as well as the insurance cost.

When your goods arrive at your destination port from China, you will pay for the unloading cost as well as the customs clearance cost.

You will after that make plans for further shipment of your goods from the port of destination to your location.

Chapter 7: FOB Shipping from China Add- on Terms

Your FOB shipping from China contract can include different terms which you need to understand.

These terms only serve the purpose of clarifying important information about your shipping.

These terms include the following.

§  FOB origin, freight prepaid

With this ad- on the term on your FOB shipping contract implies that your responsibilities include taking responsibility for your cargo at the point of origin in China.

Your supplier, on the other hand, caters for the cost of shipping the goods.

§ FOB origin, freight collect

Having this ad- on term on your FOB shipping from China implies you are fully responsible for your cargo.

This includes you paying for the freight cost as well as the shipping cost.

§ FOB Origin, freight prepaid and charged back

Under this ad- on the term, your supplier does not pay for the shipping cost but instead adds to this cost to the invoice that you will receive.

You will, therefore, pay a higher invoice amount due to these additions.

Also, you will have to take charge of your goods from the port of origin.

This includes taking an insurance cover for your goods and accepting liability for the goods.

§ FOB Destination, freight prepaid

This ad- on term gives your supplier the responsibility of paying for the shipping cost of your goods up to when they arrive at your warehouse.

This includes from the port of destination to your warehouse.

As a result, you won’t have to pay for any shipping cost.

§ FOB destination, freight collect

When using this ad- on term, you will have to pay for the freight cost once delivery of goods is complete.

You will only take liability or ownership of the goods once they arrive at your warehouse.

§ FOB Destination, freight prepaid and charged back

Your supplier will cater to the freight cost up until when they deliver the goods.

The original invoice that your supplier sends you will include these freight costs.

You will have to deduct the freight cost from the invoice before making payment to your supplier.

§ FOB Destination, freight collect and allowed

By using this ad- on term, your supplier will be responsible for your goods until when they deliver.

Your invoice will include the freight cost which you will have to pay once you receive your goods.

Chapter 8: How to Calculate Cost in FOB Shipping from China

Understanding the cost of your FOB shipping from China is essential in ensuring smooth shipping of your goods.

Here is a look at the various costs that you will encounter when using FOB shipping from China and how to calculate them.

1. Supplier’s invoice

Probably the first cost that you will have to consider when using FOB shipping from China.

At this point, it is vital to point out that even though your supplier handles certain costs, you will pay for them in the long run.

What happens is that they will accumulate all these costs and send you an invoice for you to pay.

Most of these costs are straight forward, and as such you don’t have to worry about hidden fees.

Examples of the cost that you will find in the invoice include port handling charges as well as the transportation charges to the port.

2. Carrier freight cost

Once your goods are on board a carrier, you will have to pay for the carrier.

There are various ways that you can ship your goods from China using FOB depending on your destination.

That is, you can use air, ocean, road or even rail for your FOB shipping from China.

The cost of the carrier will vary depending on factors such as the nature of the goods as well as the method you choose.

3. Insurance cost

You will have to take an insurance cover for your goods during the shipping period.

The purpose of the insurance is to cover against risks that occur during the shipping process.

A reliable forwarder will be able to take you through the available insurance covers and give you a competitive rate for your goods.

4. Port handling charges at your port of destination

When your goods arrive at your port of destination from China, it is your responsibility to offload the goods from the carrier.

You will, therefore, have to pay for the cost of unloading your goods from the carrier.

The cost may vary depending on the handling requirements of your goods.

Remember, the safety of your goods is paramount at this stage hence you need to consider the care of your goods to minimize damages.

5. Customs clearance at your port of destination

Your goods will have to go through the customs before you are allowed to have them.

There are various costs that you will incur here.

For instance, you will have to pay for the customs charges and the import taxes.

To facilitate the customs clearance process, you will need to hire the services of a freight forwarder or a customs broker.

A reliable forwarder will be able to advise you of all the customs charges at the port of destination.

You will also have to pay for the services the customs broker or your forwarder offers.

This usually is a commission of the services.

6. Delivery to your final location

When the customs finish clearing your goods, you will have to organize for further transportation to your site.

There are different methods you can achieve this depending on the availability.

The cost you will incur here will vary depending on the method you chose.

It will also depend on the distance between your location and the port of destination.

Chapter 9: Other Alternative Incoterms to FOB Shipping from China

FOB is not the only incoterm that you have when shipping from China.

Actually, there are several of them.

As a good importer, you need to compare each of them to FOB shipping from China before settling on FOB.

Here is a comparison of these incoterms and why you need to choose FOB for your shipping from China.

§ FOB Shipping from China vs. CIF Shipping from China

Cost Insurance and Freight is an incoterm that entails your supplier handling part of the liability of your goods.

They will be responsible for the payment of the cost insurance and freight charges of your products during shipment from China.

This implies that they will transport your goods from the warehouse to the port of origin and load them on the carrier.

They will then pay for the freight as well as taking an insurance policy for the goods.

Generally, CIF is a more expensive shipping option than FOB.

The reason for this is because your supplier will demand extra charges for the services that they will render to your goods.

§  FOB Shipping from China vs. FCA Shipping from China

FCA shipping from China entails your supplier or seller delivering your goods which they have cleared for export to a named carrier.

They will pay for the transit of the goods to the designated carrier and load them to the carrier.

FCA shipping from China is ideal if you are shipping containerized goods from China either under LCL or FCL.

The significant difference between FCA and FOB is the point at which the risk transfers to the other party.

Under FCA, the risk shifts to you once the supplier delivers the goods to a named place.

While under FOB, you assume the risks once the goods are on board a shipping vessel.

§ FOB Shipping from China vs. EXW Shipping from China

EX- works shipping from China is where you are responsible for all the cost right from your supplier’s warehouse to your location.

The use of this incoterm, unlike FOB, gives you ultimate control of your goods during the shipping process.

You will, therefore, find that it will cost you less when using EX- works shipping from China than when using FOB shipping from China.

The main limitation that you will experience when using this method is the risks that you will handle.

You will be responsible for any risk that will occur right from the supplier.

§ FOB Shipping from China vs. DDP Shipping from China

DDP shipping from China places maximum responsibility on your supplier or your seller.

Your supplier will be responsible for your goods right from their premises up to a named place in your country of destination.

They will handle the risks as well as the charges your goods will incur during the shipping process.

Generally, DDP is expensive than FOB shipping from China and is riskier t your supplier.

§  FOB Shipping from China vs. CFR Shipping from China

By using Cost and Freight shipping from China, you allow your supplier to take charge of the transportation cost of your goods.

This includes any cost of exporting as well as transportation to your destination.

However, you will have to incur the insurance cost as well as the cost of transporting your goods to your final location.

You will also have to take charge of the customs duties both in China and your country of destination.

Comparing this shipping option to FOB, you will notice that FOB is rather straight forward on the roles of each party.

That is, you only plan for the customs procedure of your country of destination, and your supplier handles China’s customs procedure.

Chapter 10: JMS Freight Forwarder FOB Shipping from China to Global Destinations

If you are looking for a reliable forwarder to handle your FOB shipping from China, look no further than JMS forwarders.

There are numerous advantages that you will gain by choosing us to process your FOB shipping from China.

Let me illustrate for you.

First, we understand that you need a carrier who will conveniently ship your cargo.

Through our extensive networks of carriers, we can offer you helpful advice on the best carrier for your goods.

We are conversant with all customs regulations around the world which you can tap on when using FOB shipping from China.

We will be able to facilitate your customs clearance in your country of destination.

We understand the need for a warehouse to label and package your goods properly.

That is why by choosing us, you will be able to use our warehouse free of charge for up to 30 days.

You can relax and let us help you plan for the logistics of transporting your goods from your port of destination to your location.

We will conveniently transport your goods to you.

Lastly, we understand the value of your goods.

That is why, by choosing us to handle your shipping, we can offer you competitive insurance rates for your cargo.

Conclusion

Yes, FOB shipping from China might be a little challenging at the start, but with the time you get used to it.

What is important is finding a reliable forwarder who will be able to handle your Fob shipping from China.

A reliable forwarder will inform you of every step of your FOB shipping.

This includes advising you on the best shipping router for your cargo from China.

Contact JMS forwarders today and let us give you a whole new experience of FOB shipping from China.