FOB FREE ON BOARD Cost of freight & insurance to a certain point in the transportation link (usually within the exporting country) is included in the seller’s price. Buyer must pay for freight beyond that point. Specification of fob location is critical. Ex-factory, Ex-city, Ex-port.
CIF COST, INSURANCE, & FREIGHT
Cost of freight and insurance to a port in the importing country is included in the seller’s price. Buyer must pay for freight beyond the port. Specification of CIF location is useful. Ex-port.
C&F COST & FREIGHT Cost of freight to a port in the importing country is included in the seller’s price. Buyer must pay for insurance from the originating point and freight beyond the port. Specification of C&F location is useful. Ex-port.
LANDED PRICE Usually refers to the ultimate cost of the product to the buyer at his/her place of business after paying for cost, freight, insurance, and customs fees and duties. Useful benchmark for comparing quotes from different suppliers.
EXPORT LICENSE THE U.S. HAS TWO TYPES OF LICENSES: VALIDATED LICENSE
IMPORT LICENSE THE IMPORTER MAY NEED TO OBTAIN AN IMPORT LICENSE.
MAKE SURE YOUR BUYER HAS ONE IF NECESSARY.
EXPORT DOCUMENTS Shipper’s export declaration with Export license
Commercial (and Consular) Invoice Bill of lading (airway bill) Packing list Insurance certificate Special purpose certificates Ex: Country of origin, Quality, Standards, etc.
SHIPPER’S EXPORT DECLARATION FORM
IMPORT DOCUMENTS Import license (if required)
Import declaration form (Summary Form) Customs bond Special tariff considerations
COLLECTION DOCUMENTS Consignment Open Account
Documents against acceptance D/A Documents against payment D/P Letter of Credit Cash in advance
LETTER OF CREDIT A letter issued by a bank to guarantee payment to the seller on proof of shipment Irrevocable: A L/C that is irrevocable. Confirmed: A L/C that is endorsed by a second bank, that takes up the responsibility to pay the seller.
IRREVOCABLE LETTER OF CREDIT
D/A AND D/P D/P: Documentary upon Payment
Documents are released to buyer upon payment. D/A: Documentary upon Acceptance Documents are released to buyer upon his acceptance. D/A is like open account.
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