Under FOB terms, sellers are responsible for various costs up to the point the goods are loaded onto the vessel. Here’s a breakdown of these costs:
1. Miscellaneous Fees at the Port of Origin
- Pre-Shipment Costs: Sellers must cover a range of fees before the goods are loaded, including pickup fees, container loading fees, port handling fees, port security fees, bill of lading fees, manifest entry fees, terminal handling charges (THC), origin receiving charges (ORC), seal fees, and customs declaration fees.
- Special Declaration Fees: Additional fees for special declarations, such as the Automated Manifest System (AMS) in the U.S. or the Entry Summary Declaration (ENS) in the EU.
2. Unexpected Additional Costs
- Mismanagement of Shipment: Issues like improper coordination between the ship and cargo can lead to dead freight, demurrage, container detention fees, and storage fees.
- Unclaimed Goods at Destination Port: If the goods are not claimed at the destination port, the seller may incur ocean freight charges, container detention fees, and port demurrage.
- Designated Agent Fees: If the buyer specifies a freight forwarder, the associated fees are typically higher.
- Cargo Damage Compensation: Sellers may be liable for compensation if the damage is due to their negligence.
- Loss from Release Without Bill of Lading: Sellers risk not receiving payment if the goods are released without the bill of lading.
- Issues with Letter of Credit Soft Clauses: Sellers may face difficulties in receiving payment if the letter of credit contains unfavorable terms.
By understanding these responsibilities and costs, sellers can better navigate the complexities of FOB shipments and ensure a smoother transaction process.
