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How to Lower the Risk Under FOB?

ABigBizApr14, 2020Trade Policy Leave a Reply

Recently, I have known that everyone has concerned a question: FOB customer makes a definite demand for designated freight forwarding and you will get under the risk of customer's receiving goods without original B/L. Don't worry, I will give you some advice!How delivery of goods without B/L happens?FOB means that buyer designates carriers (usually the foreign forwarders or Chinese agency), buyer controls transportation procession and fright forwarding: delivery of goods without B/L always happens under this circumstance.This kind of trade usually has two kinds of B/L: master B/L and house B/L. The freight forwarder names himself as shipper and books shipping space with the selected shipping company, receiving the master B/L from them: the B/L domestic exporter received is issued by forwarder (or even without the B/L), the information of consignor and consignee is the seller and buyer.Forwarder receives the master B/L from shipping company and deliveries it directly to the foreign agency, and foreign agency can pick up the goods from the shipping company with the master B/L. And it is another matter whether the foreign forwarder takes back the house B/L after the goods is delivered to the actual consignee. If the foreign forwarder doesn't require to take back the original B/L when delivery, then it means that the B/L in shipper's hand is useless.What kind of delivery is safer?Generally, it will be more beneficial to use CIF or CFR term than FOB in export business. But if we have to use FOB terms, we can do as following:1.Shipment date should be clearly specified in the contract in case of any delay after the goods is ready.2.Improve the deposit ratio, reduce probability of customers' defection:3.In trade contact, both parties should agree well in their freight forwarding company, but not be confined to specific one. If carrier or the B/L does not record in China Transport Bureau, you should be watchful. At the same time, the buyer should ask the Chinese agent to issue a guarantee letter when the agent issue the formality of loading port, and guarantee that the designated foreign freight forwarding should show original B/L under the turnover of bank from L/C when goods arriving the loading port. Otherwise, the buyer will assume liability to pay compensation on delivery without B/L. But only in this way can we claim for compensation with evidence if such situation happens.4.Under the FOB circumstance, it should be specified in the contact that booking shipping space should be booked by forwarders or carriers designated by shipper. The right of booking space cannot assign to buyer, because it is unified for the right of booking space and delivery goods. The shipper column of B/L should be filled with the name of seller. The shipper owned the right for designating booking space and goods. If buyer has a good credit and demands for resale, it's ok to assign buyer as carrier. If you do not know too much about the buyer, on the safe side, it will be better to assign seller as carrier.5.It is also acceptable to use order B/L assigned issuing bank as consignee, which can make the bank control the goods and avoid the risk of delivery without B/L.6.Make the SINOSURE to lower the risk. Make sure you have learned more about the countries and regions of the blacklist and learn more about the case in case of any loss.How can sellers do when delivery without B/L happens?My suggestion is to ask for SINOSURE. The suggestions online are to ask embassy for help, go to an International court, put them into blacklist, or collection agency. Apart from the background of the buyer and whether he is afraid of such threat or not or if he has an underworld background, only just overseas to follow such trouble is really a big trouble.As a matter of fact, the property right is the essential part of foreign trade, so do not make yourself fall into a trap. That is to say it is better to awaken to peril until it is almost too late than remedy afterwards.

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