Incoterms can be intimidating and confusing for many new importers. Knowing how incoterms function, which terms offer the best solution is essential will help you avoid unexpected costs when importing from Chinese ports. You can import from Huangpu to the UK through FOB or EXW. Here is a guide to help you choose the best solution for your cargo.

Free On Board(FOB)

For Free On Board (FOB) terms, your supplier will pay for all the charges and transportation on your behalf from Huangpu to your courier’s warehouse. The local transport costs will be part of the buying price of your goods.FOB shipping is generally the most straightforward approach to importing goods from China because your supplier will handle all the hassles of local transportation. You will only pay your supplier on FOB terms for the products and then hire a freight company to deliver the goods to your door from the port with no hidden costs.FOB (free on board) is a shipping word that usually refers to a port of origin for the supplier’s shipment. If your invoice says “FOB Huangpu,” it means that your supplier will cover all local fees, including cargo transport to Huangpu port, documentation, port handling, customs clearance, and export licenses.

Advantages and Disadvantages of using FOB

Some of the advantages of using FOB terms when importing your goods are that:

  • Throughout this procedure, you will be keeping track of your costs to avoid any surprises and additional charges on your goods.
  • Your supplier will be aware of the documentation required for exporting their goods, which will minimise your work during the importation of the goods to the UK.
  • Most suppliers operate on FOB terms as a standard.

FOB terms also have disadvantages. For example

  • Your supplier could add a margin to the FOB costs, which will lead to you paying more for your goods.
  • Your supplier might supposedly increase the price of the commodities, which will lead to a surprise increase in your cost.

EX-Work(EXW)

When importing from Huangpu on EXW incoterms, you, or your freight forwarder, assume full responsibility for all expenses and risks from the seller’s door to your warehouse in the UK. You are responsible for any charges associated with making the arrangements with the freight company. Because of the permits in place and their distance from the port, getting an accurate price for transporting your goods from your supplier is a little more complex than on FOB terms. When operating on EXW terms, your costs are transparent, and there should be no surprises, but getting a quote may take a little longer.

 

Advantage and Disadvantages of using EXW

EXW provides the advantage of transparency and the convenience of having all your import procedures handled from a single point. Apart from the time your products are in customs, you have complete control over the shipping. You save yourself the risk of inflated local expenses. Still, EXW has its drawbacks, for example;

  • You need your supplier’s information to clear export customs at Huangpu port. If your supplier gives you inaccurate information, you may be responsible for any additional charges incurred as a result. You’d also be liable for any fees incurred if your items were randomly chosen for a customs examination while being cleared for shipment in Huangpu.
  • If you are a beginner buying from different traders, you’re effectively buying from each trader on Ex-works terms. If you’re not careful, you may end up paying a lot of money for international costs.

Cost, Insurance and Freight or Cost and Freight(CIF/CFR)

Both CIF and CFR are pretty similar, but the seller pays for insurance on CIF shipping terms. Your supplier will cover all costs associated with transporting the products to the United Kingdom on your behalf under these terms. Your responsibility for the imported goods begins once they arrive at the UK port. The total cost of import might get out of hand due to the unexpected expenses that will inevitably arise along the way. If you are a beginner, it’s best to avoid these conditions since they may get complicated; they may appear to be the cheapest option, but there are often hidden expenses.

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