We often see questions and confusion over Inco-Terms.
Inco-Terms are what is used globally, to decipher who is responsible for which part of the logistics process between you and your supplier.
The image shows where the responsibility, risks and more importantly Control lies.
In our opinion, the first mistake people make is being put off by the word ‘risk’. It really is more risky and potentially costly to put your valuable cargo in the hands of someone else (your supplier) for too long. It travels the same way, using the same methods – but buying your goods FOB gives you the complete control and cost efficiencies of your cargo. You should be the customer to the Freight Forwarder (not your supplier). You should be the one in control of where your cargo is, when it’s arriving and confirming you can have release of it (after you’ve paid the supplier), rather than the factory taking your money and still not releasing it. This can be for delays, holidays, or communication discrepancies.
BUY FOB TERMS!
FOB means you appoint your own freight company. You control and negotiate your cost for that (not your supplier who WILL make a margin on it), and you get the real, best competitive price for the goods you’re buying without over complicating matters. You add insurance with your Forwarder and gain a competitive rate from someone who values you as a customer.
Don’t fall for the Classic Trick!
If your supplier seems ever so helpful and ‘we ship so much we get the best deal on freight’ whereas they try to handle the shipping for you, tell them no thanks. What happens especially in the Far East, Middle East in particular is that the supplier will actually get PAID to book your cargo with a freight company. A kick back.
When your product arrives to it’s destination in Europe, UK or USA – you will find a long list of heavily over inflated charges, such as;
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£95 Documentation Fee (What?!?! Which document costs that much? Clue, none)
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£55 Port Security Charge (No, it should be more like £25)
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£75 CAF Fee (Currency Adjustment Factor) This isn’t charged these days and is very old hat!
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£95 per cbm/1oookgs handling fee (Woooahhhhh!!! This should be more like £20 a cbm!)
There’ll be no freight charge, as that is of course Free isn’t it 🙂
Don’t fall for it. Take control of your valuable goods where you are valued as the freight agents customer. Want a reputable Freight company? Look no further – Westbound Logistics Services.
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