Terms of sale for Importing FOB or Ex Works, what’s best?

Terms of sale are almost universally used when trading internationally. When importing from China or importing from India, by air or by sea freight, terms of sale, whilst not incorporated in law do provide clear lines regarding responsibilities and who pay what costs in international freight.

There are some anomalies, not surprising really as Incoterms where first introduced in 1936 and they always seem to struggle to keep up with international trade despite numerous re-writes.

Take FOB for example which is used for around 90% of imports by air and imports by sea into the UK China, the Far East and also imports from India. responsibility for the cargo transfers from shipper to consignee at the point where the cargo is loaded on a ship or plane so how can anyone know if damage has occurred by this point and if so who is responsible?

Fortunately there is an easy answer to this conundrum, always ensure your goods are covered by a good marine transit insurance policy!  A quality policy from a quality insurer will always cover goods from door to door, ignoring any terms of sale applied.

Should you be tempted to buy ex works, be aware even more profound traps are there for you to fall into. All your supplier has to do is make goods available for you or your freight company to collect. Nothing can leave China for example without an export licence. So you could end up the proud owners of products in China which cannot leave the country and a Chinese government who only issues licences to Chinese companies. You may turn to your supplier who’s done all you’ve asked them to do – make the goods available.

If you want further advice on importing, international air freight international sea freight or insuring goods in transit why not contact us through or www.klfreight.com or even give us a call!