Price Quote in International Trade

By GeoPilgrim February 10, 2009 Shipping Documents, Startup Considerations

OK, you have found a product you want to buy, received a sample in the mail, or found a source of supply overseas and now you are standing in the manufacturer’s/exporter’s office or a showroom and you just asked him the price of the product.

In import / export business, the price quoted reflects responsibility for the movement of goods. It clearly delineates which expense is for the account of the Buyer and which for the account of the Seller.

Based on the Revised American Foreign Trade Definitions, 1941, following are some of the most common ways how price is quoted in the import / export business.

* Ex (point of origin): price at a shop / showroom / warehouse / factory

* FOB (Free On Board) Named inland carrier at named inland point of departure / shipping point
-FOB Mysore, India (Madras Express, Indian Airlines, Tamil Trucking)
-freight-collect to the buyer or buyer prepays freight
-Seller provides Clean B/L (Bill of Lading)
-Seller at Buyer’s request assists in obtaining necessary documents

* FOB Named inland carrier at named point of Exportation.
-FOB Madras (means that the Seller pays for the cost of transportation up to the port of embarkation)

* FOB Vessel & Named port of shipment
-FOB Madras, APL President Lincoln
-Seller to place goods On Board the vessel designated

* FOB Named inland point in the country of importation
-FOB Seattle
-Seller to pay all costs of landing – taxes, wharf fees, all costs of Customs Entry, customs duties

* FAS Vessel & Named port of shipment: Free Along Side
-FAS President Lincoln, APL, Bombay, India
-Buyer is responsible for storage charges in a warehouse or on a wharf

* C & F (cost and freight) Named point of destination:
-C&F Seattle
-Seller to pay freight to destination, provides Clean B/L
-Buyer takes delivery from vessel at named point of destination
-Buyer pays insurance

* C. I. F. Named point of destination (cost, insurance and freight)
-CIF Seattle

* Ex dock (Named point of importation)
-Ex dock Seattle
-Seller agrees to pay all freight costs to place the goods on the dock at the named place of importation

Please note, if you will be buying from village markets, cottage industries or small dealers which may not be licensed exporters in a particular country, you will be quoted typically on the basis of a cash price that will not include cost of anything else, whether transportation or any necessary documents you may need to export the product out of that country. Thus before you’ll decide to buy, make sure you check with the “shippers” in that country what extra expenses you may incur, and if any difficulties may arise as a result of you buying from unlicensed exporters.