FOB terms, merits for sellers
The below details are one of our web posts about international commercial terms, its impact when functioning from buyer’s and seller’s perspective separately and comparison between each terms separately.
The following information is about the merits for sellers under FOB terms.
Here are those advantages to exporters when delivery terms are on FOB terms in an international trade one by one:
01. One of the main advantages for exporter under FOB terms is that the exporter is liable for minimum risk and cost involved under movement of goods when delivery terms are on FOB basis. Once goods are gone on board the vessel, the seller transfers his risks and costs to buyer to reach the goods to final destination of buyer.
02. Under FOB terms, the buyer need not spend more amounts to move goods to buyer’s place. So, the investment to business minimize up to that extend, thereby total invoice value of goods. This is another advantage for exporter when the delivery terms are on FOB basis.
03. Another merit for exporter under FOB is that ; since the seller is responsible for risks and costs till the goods are gone on board the vessel, he learns rules and regulations of government to export goods in his country. Compared to EXW, this is an advantage to Seller to contract with same buyer or other buyers to agree delivery terms as FOB. This is an advantage for exporter under FOB.
04. The exporter’s responsibility to safeguard the goods ends when goods gone on board the vessel under FOB terms. The buyer takes care of the safety of goods further. This is an advantage for exporter under FOB
05. Under FOB, the delivery of goods is taken place at seller’s country; further movement is undertaken by the buyer. This is an advantage for exporter under FOB.
06. Another benefit for exporter under FOB is that the unloading of goods under FOB is under importer’s liability and exporter is not responsible for any damage of goods while unloading.
07.Under FOB terms, the selection of freight in main carriage is done by the importer thereby risks passes to buyer against the service given by the main carrier or their agent. This is another advantage for seller under FOB terms of delivery.
08. One of the most advantages for exporter under FOB terms of delivery is that, compared to all D categories of delivery rules, under FOB, the exporter carries less risks in movement of goods.
Hope the above information about the advantages for exporters under FOB terms.
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