FOB contracts and foreign customs charges

Question posted by Paul Gooch, on behalf of iAngler Ltd in BR2

Hi guys,

I have had some goods inspected at customs in Shaghai and have been charged $254 for the privilege. Unfortunately I was unfamiliar with the specifics on FOB and wondered if there was a generic FOB contract I could use that states that any charges received from customs (their side) would be covered by the manufacturer. This way it would be clear who covers these charges and I could get my manufacturer to sign this before the goods are produced.

Does anyone know where the responsibility lies here for this charge? Myself or the Manufacturer?

If anyone has any knowledge on this subject I would greatly appreciate this. My Freight Forwarder informs this is just bad luck and is one of the possible disadvantages of import/export.

Thanks in advance for the support, it is greatly appreciated!

Kind regards

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Paul Hickey, on behalf of Mercator Cargo Systems Ltd in PO1.

Hi Paul,

Incoterms are set out very clearly in the ICC Incoterms 2010, you shouldnt really have to specify anything beyond this as there really is no ambiguity. Under an FOB contract it is the seller's responsibility to clear the goods for export - if a fine has been incurred from Chinese customs then it should be the supplier's responsibility to absorb this. Your Freight Forwarder really should fight that charge away.
If you want to discuss this or any other shipping or international trade matters further I am happy to help, we are family owned and run freight forwarders with 23 years trading behind us - you can call me on 02392756575 or email me on james@mercatorcargo.co.uk
Thanks
James

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Hi Paul,
Under INCO terms 2010, which is the latest edition, the seller (your manufacturer) is fully responsible for costs ; INCOTERMS State 'Where applicable, the seller must obtain, at its own risk and expense, any export licence or other official authorisation and carry out all customs formalities necessary for the export of the goods." I am just waiting for absolute clarification from BIFA, but I am pretty confident that your supplier should be absorbing these costs.

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Hi Paul,
Under INCO terms 2010, which is the latest edition, the seller (your manufacturer) is fully responsible for costs ; INCOTERMS State 'Where applicable, the seller must obtain, at its own risk and expense, any export licence or other official authorisation and carry out all customs formalities necessary for the export of the goods." I am just waiting for absolute clarification from BIFA, but I am pretty confident that your supplier should be absorbing these costs.

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Paul Gooch, on behalf of iAngler Ltd in BR2.

Hi guys,

I thought this was the case but wanted to clarify, as I'm a relatively new to all this.
I will re-read the Incoterms2010 to help familiarise myself with the finer details.

Kind regards

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Hi Paul,
If you need a comparative quote for importing the consignments we would be only too pleased to assist. We are a family run business established in 1925; our partner in China, VIEW SCM has about 15 offices in China in all the main industrial areas, and they are also happy to liaise with your suppliers as to availability of goods etc. We can forward goods via air and ocean-freight, both part and full loads. Check out our website for more information on INCOTerms
http://www.ccfreight.com/glossary/#f, albeit a much briefer version than the actual INCOterms publication.

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Mike Barnes, on behalf of Despatch Point Limited in RG22.

Hi Paul
How were the goods being shipped? Air or Sea? FOB is a term for sea shipments but if containerised then I believe the correct term should be FCA. Incoterms and their relevance to different modes of despatch can be confusing and therefore the responsibility for charges can be a matter for discussion. I would suggest getting a copy of the Incoterms 2010 from International Chamber of Commerce and confirm which terms are applicable. Let me know if you need any further info or indeed comparison quotes.
Regards
Mike Barnes.

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Paul Gooch, on behalf of iAngler Ltd in BR2.

Hi guys,

Thanks for the response. Mike, thanks for the info, I will contact the International Chamber of Commerce.

Chris, thanks for the advice and support, I already have a freight forwarder but will definitely keep you in mind,

Kind regards

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OK I'm a great believer of the old saying 'If it ain't broke, don't fix it', so if you're happy with your present forwarder then as you say, I may hear from you in the future.
best regards
Chris

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Sandra Strong, on behalf of Strong and Herd LLP in M22.

Hi Paul
Did your contract/agreement with the supplier actually state clearly "FOB port of departure Incoterms Rules 2010" or did it just vaguely state "FOB" somewhere without linking it to either a place of departure or the legal set of Incoterms?

Unless you clearly state the place and that the contract is covered by Incoterms Rules you are dealing with vaguenesses. FOB, as well as being one of the Incoterms, is also a commonly used JARGON term with different definitions in USA, China, some South American countries - especially with regard to port costs. Under some jargon definitions the FOB point of delivery can be variable, it can even be at the seller's premises. Incoterms were written to get rid of these variables and vaguenesses BUT unless you say you're using Incoterms and state the place to which the seller must deliver the goods then you might as well not bother having a term. The 3 letters are not magic on their own.

The costs incurred are Customs inspection fees at export I believe. Under Incoterms 2010 rules - as stated, the seller is responsible for all costs and risk up to loading the goods on board the ship. This is loading the goods on a ship, not loading a shipping container and putting the loaded container on a ship - container freight should be FCA Incoterms 2010. If only "FOB" was stated then you have left the too vague and the power is generally in the hands of the supplier unless you are big enough to fight back.

Happy to chat and we do Incoterms interactive training - it's good fun too! http://www.strongandherd.co.uk/category/incoterms-training/?eid=23
sandras@strongandherd.co.uk

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