Import or sell CIF FOB should or should not?

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Importing FOB CIF offers many incentives for Vietnamese businesses from shipping lines. So what are those incentives specifically? Let the experts of LEC Group thoroughly explore this issue.

Comparison between CIF and FOB

Similarities between CIF and FOB:

• Both are conditions of delivery in Incoterm 2010 recommended for international and inland water transport.
• Are the 2 most common delivery terms used today.
• The positions of responsibility transfer and risks are both at the port of loading (port of departure).
• The responsibility of carrying out export customs procedures rests with the seller. The procedure for importing goods belongs to the buyer (buyer).

Differences between CIF and FOB:

• Conditions in Incoterm: CIF terms - freight, insurance, freight, FOB delivery conditions - delivery on board.
• Liability of charter ship: CIF - seller must find the ship, the buyer is not responsible for finding the ship. FOB - The seller does not need to hire a ship, the buyer is responsible for the book ship.
• Insurance: CIF - the seller is responsible for signing an insurance contract for the exported consignment, usually providing a policy of insurance of at least 110% of the value of the goods. FOB - The seller does not have to buy insurance.
• The final place to terminate the contractual obligations: although both the terms of delivery of CIF and FOB have the same position of risk transfer as the ship's rail. However, for CIF, you have the final responsibility when the goods have reached the port of discharge (port of destination).

Why should import FOB sell CIF?

When importing CIF FOB, businesses will receive incentives from shipping lines. Can choose the shipping lines cheaper than the price charged to the other importer. In addition, if hiring Vietnamese shipping lines, businesses will receive the necessary documents quickly. Thanks to that, it can solve the problem quickly and help save time, improve the efficiency of delivery and payment of goods.

When delivered under CIF terms, direct exporters will earn a higher foreign exchange value than when exported by FOB. In addition, if businesses are short of capital, they can also use letters of credit (L / C) to mortgage at banks. Since then businesses will borrow a higher amount.

In addition, when importing FOB to sell CIF, businesses will be more proactive in delivery. Absolutely not dependent on the ship (or container) assigned by the importer. In some cases, due to the dependence on foreign passengers, the slow arrival of ships destroys goods gathered at ports or in warehouses (especially for agricultural products).

Currently, insurance and ship (or container) service providers in Vietnam are underemployed. Therefore, if businesses contact to buy insurance or hire a container (container) for Vietnamese companies. Will contribute to increasing sales for these companies. At the same time create more jobs for our country.

When importing FOB to sell CIF, businesses will have to pay less deposit for opening L / C. In addition, when foreign customers delivery, there are some cases after 3 days they contacted for money. But if you import FOB, when the goods arrive at the port, the new importing enterprises must pay the freight. As a result, businesses do not have to accumulate capital or pay interest on bank loans for freight charges, reduce the cost of imported goods.

Above is all the sharing of LEC Group experts on importing FOB and selling CIF. If you are looking for a company that provides complete and professional logistics services. Please contact us today to receive the best support!

LEC GROUP

Head Office: Road 4, Phu My 1 Industrial Zone, Phu My Ward, Phu My Town, Ba Ria - Vung Tau, Vietnam.

Add: No. 28 Thao Dien Street, Thao Dien ward, District 2, Ho Chi Minh City, Viet Nam.

Hotline: (+84) 909 800 136 & (+84) 901 388 136.

Email: info@lecvietnam.com & thao.nguyen@lecvietnam.com

Website: https://lecvietnam.com/

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