Understanding Shipping Terms

Shipping Terms

Shipping is one of the crucial parts of a business transaction. Disputes caused by lack of documents, authorisation and communication may happen if the seller, shipper, and buyer are at lost with the procedures of freight transport. To avoid this, there are different shipping methods which the seller and buyer can utilise to prevent problems. Here are some of them.

1. Selling FOB

Free on Board is one of the preferred transport ordeals of the buyer. It is safe for the customer since it transfers the liability to them once the product is out of the seller’s storage. If there are any damages and conflicts with the package, the buyer will be the one to shoulder everything, including the expenses. The buyer also pays the delivery fee. Although this method is quite unusual, there are also advantages on the part of the customer. Customer may take full control of the shipping terms and destination. He allocates the budget for the delivery accordingly since he is knowledgeable of the fees and terms. The customer may also track the course of his package.

2. Selling CIF

CIF is Cost, Insurance and Freight. This type of method is ideal for a new buyer. The customer will not handle the shipping cost, but instead, the seller will be fixing it for him. Thus, the customer will not know the shipping fee, whether it is way beyond the standard rates. This is difficult for buyers since they do not have control over their product, and they will not have any option on how to be updated on the status of it. Delivery fee may also be expensive, which can make the price of the seller’s product higher. Although the package is insured in its freight, once it reaches its destination, it is not on the hands of the seller anymore. What happens on the port will now be shouldered by the buyer.

3. Selling CNF

Shipping Company

This type of method is more complicated than that of the CIF. It means Cost and Freight or Cost, no Insurance, Freight. This means that the seller is not tasked to get insurance for the items of the buyer once it is on the port. The buyer’s responsibility is to get an insurance plan for his product. The liability now goes to the buyer. The seller will still arrange the shipment method and freight details but not the permits. Seller is responsible for getting specific permits at the destination. This delivery method may be the cheapest, but it is also the most inconvenient.

A business grows rapidly if they can promptly access freight shipments in all forms may it be through land, sea or air. Customers from all over the world may use the shipping ways to get their items. It is crucial to accommodate and provide the support that they need from you. When proceeding with business engagement, be prepared to answer all inquiries of your buyer. Maintaining a good relationship with the stakeholders is vital for the growth of your commerce and trade. There may be complications and dilemma when transacting and shipping. Make sure to be ready in case the worst-case scenarios happen.

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