The current international trade methods are generally divided into FOB, CIF and CIP. FOB means that after the goods have crossed the ship’s rail, the seller has the right to demand payment from the other side according to the contract. That is, for FOB (FOB), as soon as your goods leave the dock, you are fine (really fine? See the case at the end of the article). In the case of CIF, you must safely deliver the goods to the port designated by the other party before you can enjoy the above rights. The intermediate expenses shall be borne by the seller.For goods declared on CIF basis, the calculation of exemption and tax credit should be based on the following formula: exemption and tax credit =(transaction amount – sea freight – insurance – foreign banks and other deductions)× refund rateFOB,CIF,CFR three trade terms first appeared in the 1932 Warsaws-Oxford Rules. The rules have been modified several times, and finally the International Rules for the Interpretation of Trade Terms, referred to as the 1990 General Rules, is the most common and authoritative publication. In the domestic three terms are now standardized called price terms. On deck delivery, the costs and risks before the goods cross the ship’s side shall be borne by the seller, and the costs and risks after that shall be transferred to the buyer. Of course, if the goods are allowed to cross the ship’s side, the formalities of export customs clearance shall be completed by the seller. Cost + freight: the seller is responsible for the cost of transporting the goods to the designated port of destination. The risk is bounded by the goods crossing the ship’s side at the port of loading. The risk before belongs to the seller and the risk after belongs to the buyer. The Seller shall bear the costs and risks incurred during the period of shipment to the port of destination, provided that the Seller’s insurance coverage meets the minimum requirements.FOBIn the case of container transport or ro-ro transport, the ship’s side has no practical significance,FOB terms can be changed to FCA(freecarrier)CFR clause can be changed to CPT(cost&freight paid to destination point)CIF clause can be changed to CIP(costinsurence freight paid to destination point)The export customs clearance of the three terms shall be borne by the seller, and the import customs clearance shall be borne by the buyer.According to the customary practice of the international insurance market, the insurance amount of the export goods is generally calculated at the CIF price plus 10%, which is called the insurance premium rate or insurance premium rate, that is, the buyer to pay for the transaction and the expected profit. The formula for calculating the amount of insurance is: amount of insurance =CIF price *(1+ insurance premium rate) CIF is the basis for calculating the amount of insurance, indicating that not only the goods themselves, but also freight and insurance are insured as the subject matter of insurance, and losses are compensated. Therefore, for the goods insured under the CFR/FOB contract, it is necessary to quote the CFR/FOB price first to calculate the insurance amount. The calculation formula is as follows: convert the CFR price into CIF price: CIF=CFR/[1-(1+ markup rate)* sum of premium rates], and convert the FOB price into CIF price: CIF=(FOB+F)/[1-(1+ markup rate)* Sum of premium rates]I. Commission calculation formula:⑴ Including commission price = net price + unit commission⑵ Unit commission = including commission price × commission rate(3) Including commission price = Net price + (including commission price × commission rate) = net price /(1- commission rate)2. Discount calculation formula:(1) Discounted price = original price ×(1- discount rate)⑵ Discount amount = original price x discount rate3. The conversion formula between the three trade terms and the prices included in the commission1. Convert FOB price to other prices(1)CFR=FOB+F(2)CFRC=FOB+F /(1- commission rate)(3)CIF=FOB+F /(1- premium rate × premium rate)(premium rate =1+ premium rate)(4)CIFC=FOB+F/(1- premium rate × premium premium – commission rate)2. Convert CFR to other prices(1)FOB=CFR – F(2)CFRC= CFR/(1- commission rate)(3)CIF=CFR/(1- premium rate × insurance premium)(4)CIFC= CFR/(1- premium rate × premium premium – commission rate)3. Convert CFRC price to other price(1)FOB=[CFRC× (1- commission rate)] -f(2)CFR=CFRC× (1- commission rate)(3) CIF=[CFRC× (1- commission rate)] / (1- premium rate × premium premium)(4)CIFC= [CFRC× (1- commission rate)] / (1- Premium rate × Premium – commission rate)4. Convert CIF price to other prices(1)FOB= CIF× (1- premium rate × insurance premium) -f(2) CFR= CIF× (1- premium rate × premium premium)(3) CFRC= [CIF× (1- premium rate × premium premium)] /(1- commission rate)5. Convert CIFC price into other price(1) FOB= CIFC× (1- premium rate × premium premium – commission rate) -f(2)CFR= CIFC × (1- premium rate × premium premium – commission rate)(3) CFRC=[CIFC × (1- premium rate × Premium premium – commission rate)] /(1- commission rate)Iv. Price calculation formula:1. Cost accounting formula(1) Actual purchase cost = cost including tax (purchase cost)- export tax rebate amount(2) Export tax rebate amount = cost including tax × export tax rebate rate ÷(1+ VAT rate)2. Freight calculation formula(1) general cargo freight; Basic freight + surcharge(2) Container freight; LCL and general cargo freight are calculated as FCL = compartment rate + surcharge3. Insurance premium calculation formula(1) Premium = amount insured × premium rate⑵ Insurance amount =CIF price ×(1+ insurance markup rate)The premium rate is generally 10% and the insurance amount is calculated based on CIF(CIP) price or invoice value4. Profit accounting formula(1) Sales price = actual cost + profit amount = actual cost + actual cost × profit rate(2) Profit = actual cost x profit rate5. Profit and loss accounting formulaTotal export cost = the purchase price of the export of carburet brining agent gotene building goods + domestic expenses + taxes + profitsNet foreign exchange from Export Sales (USD)= FOB Total price (USD)=CIF Total price – Foreign Freight – Insurance (USD)Net income from export sales in RMB = Net income from export sales in foreign exchange (US $) =FOB total price (US $) x bank buying price =[CIF total price – foreign freight – insurance (US $)] x bank buying priceExport profit and loss ratio =(export profit and loss amount/total export cost)×100%Export profit or loss = net export income in RMB – total export costCost of exchange for export goods = Total cost of export (RMB)/ net foreign exchange income from export sales (USD)Export exchange rate =(net export foreign exchange income of finished products – foreign exchange cost of raw materials)/ foreign exchange cost of raw materials X100%FOB–Free on Board (cost price)Also known as Free on board (named port of shipment) clause. This means that the seller has fulfilled his delivery obligation when the goods have crossed the ship’s rail at the named port of shipment. This means that the Buyer shall bear all costs and risks of loss and damage to the goods from this time forward. In other words, when the goods cross the ship’s rail at the named port of shipment, the main risks and rewards in the ownership of the goods are transferred to the buyer.(1) The division of the basic obligations of the buyer and the sellerAccording to the International Chamber of Commerce’s interpretation of FOB, the basic obligations undertaken by the buyer and seller can be summarized as follows:1. Seller’s obligations(1) Deliver the goods to the buyer at the port of loading in the customary manner within the time or period specified in the contractSend on board and notify buyer promptly.(2) Obtain an export license or other official approval document at your own risk and expense. When it is necessary to go through customs formalities, all customs formalities necessary for the export of the goods are completed.(3) bear all costs and risks until the goods pass over the ship’s rail at the port of loading;(4) To furnish at your own expense the usual documents proving delivery of the goods to the ship. If the buyer and seller agree to use electronic communication, all documents can be replaced by electronic data interchange (EDI) information with equal validity.2. Buyer’s obligations(1) Risk and expense of obtaining an import license or other officially approved document. To complete all customs formalities for the importation of goods and, if necessary, the transit of goods through another country, and to pay the relevant fees and transit fees;(2) Charter or book space, pay freight and give the Seller adequate notice of the name of the vessel, the place of shipment and the required time of delivery;(3) bear all costs and risks after the goods have crossed the ship’s rail at the port of loading;(4) Accept the relevant documents provided by the seller, take delivery of the goods, and pay for the goods according to the contract(2) Differences in the interpretation of FOB in the United StatesIt is worth noting that the interpretation and application of FOB in the Revised Definition of Foreign Trade of the United States in 1941 differs significantly from the general international interpretation and application, which is mainly reflected in the following aspects:(1) The general interpretation of FOB as delivery on a certain means of transport at a certain place has a wide scope of application, so that when negotiating a FOB import contract with the United States, in addition to indicating the name of the loading port, the word “Vessel” must be added after FOB. If the term “FOB San Francisco” is used only and the word “Vessel” is omitted, then the Seller is only responsible for the delivery of the goods to any place in San Francisco and not for the delivery of the goods to the port of San Francisco and delivery to the ship. Since Canada and other countries also cite the practice of the United States, therefore, when signing FOB import contracts with merchants in Canada and other countries, we should also pay attention to the above problem.2. The division of risks shall not be based on the board of the port of loading, but on the cabin, that is, the seller shall bear all loss and damage arising from the loading of the goods to the cabin.(3) In terms of costs, the buyer is required to pay the cost of the seller’s assistance in providing export documents, as well as export taxes and other costs incurred in connection with the export.Alteration of FOB trade termsIn FOB terms, the seller is responsible for all expenses incurred before the goods are loaded on board. However, due to the long history of the term, there is no unified and clear interpretation of the concept of “loading” when used in various countries and regions, and the specific costs involved in the process of loading operations, such as the cost of transporting the goods to the ship side, the cost of lifting on the ship, the cost of stowing and stowing, etc. are borne by who, and the conventions or customary practices of various countries are not completely consistent. If the liner transport is adopted, the loading and unloading of the ship’s pipes and the loading and unloading charges will be included in the liner freight, which will naturally be borne by the buyer responsible for chartering the ship. However, if the transport is carried by a chartered vessel, the ship generally does not bear the loading and unloading costs. It is necessary to clarify who should bear the costs during the shipment process. In order to explain the burden of shipping costs, both sides often add additional conditions after the FOB term, which forms the conditions of FOB, mainly including the following:(1)FOB Liner Terms(1)FOB liner termsThis distortion means that the shipping costs are handled according to liner practice, that is, borne by the ship or the buyer. Therefore, with this modification, the seller does not bear the relevant costs of shipping.(2)FOB Under Tackle(FOB under tackle)Means the delivery of the goods at the Seller’s expense within reach of the hook of the Buyer’s designated vessel, and the lifting of the cabin and other expenses shall be borne by the Buyer.(3)FOB Stowed(FOB stowed included)Means that the Seller is responsible for loading the goods into the hold and bearing shipping expenses including stowing charges. Stowage refers to the cost of arranging and arranging the goods after they are in the hold.(4)FOB Trimmed (FOB trimming fee included)Means that the Seller is responsible for loading the goods into the hold and bearing shipping expenses including trimming charges. Trimming charge refers to the charge for leveling the bulk cargo loaded into the hold.In many standard contracts, FOBST (FOB Stowed and Trimmed) is often used to indicate that the seller shall bear all shipping costs including stowed and trimmed.The above deformation of FOB is only to indicate who bears the shipping costs and does not change the delivery point of FOB and the boundary of risk divisionCIF(cost, insurance and freight)1, also known as the cost and carriage premium (named port of destination) clause. Means that in addition to the same obligations under CFR, the seller must also insure the goods against the risk of loss or damage to the goods borne by the buyer during carriage. The seller signs the insurance contract and pays the premium. The seller’s liability passes to the Buyer from the time the goods pass over the ship’s rail at the port of destination. In other words, when the goods cross the ship’s rail at the designated port of destination, the main risks and rewards of ownership of the goods are transferred to the buyer.2. This term of price is also known as “CIF price”, and according to the general interpretation of international trade practice, the obligations of the buyer and seller under CIF terms are as follows:Seller’s liability:(1) Be responsible for chartering a ship or booking space, loading the goods on board and paying the freight to the port of destination within the time limit stipulated in the contract, and notify the buyer after loading;(2) Be responsible for all costs and risks before loading the goods on board;(3) To handle insurance and pay insurance premiums;(4) Responsible for handling export procedures and providing documents issued by the government of the exporting country or relevant parties in person;(5) Responsible for providing relevant shipping documents, including official insurance documents.Buyer’s responsibility:(1) bear all expenses and risks after loading the goods on board;(2) Accept the relevant shipping documents provided by the seller and pay for the goods according to the contract;(3) Handling import formalities for receiving goods at the port of destination.3. For goods declared on CIF basis, the calculation of exemption and tax credit should be based on the following formula: exemption and tax credit =(transaction amount – sea freight – insurance – foreign banks and other deductions)× refund rateCost and Freight (CFR)1, also known as
