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The perfect freight shipment starts with clarity in terms

If you’re working with forwarders and other shipping agents, it might be helpful to know some commonly used and important terminology. You want to be on the same page as your freight forwarder, so you can secure the right options for your transportation needs and not end up asking for something that gets interpreted as something else.

For example, lot of people say “FOB destination” when they’re requesting “FOB shipping” services. It’s confusing, because to those of us in the industry, we know exactly what FOB shipping is and why it’s called that. Maybe it seems to you that “FOB” should be enough of an indicator, so we should be able to figure it out. But we live and breathe freightspeak (a term I just made up for freight industry jargon), so our brains are wired a certain way, and our ears perk up when we hear “shipping” and “destination.” 

(You can get more shipping terms at www.etcinternational.com)


The verbiage used by shippers to their forwarders is of most importance to prevent destination & service errors that would translate into delays & added cost to the shippers. This is a common and expensive mistake seen with new shippers or the disorganized ones.

Commonly enough, we hear importers or exporters using the term “FOB destination.” Since FOB stands for “free on board” (your shipment at the origin port), shippers should not use the term “free on board destination.” With FOB shipping, the buyer takes possession of the shipment at the departing port.

Making the choice for FOB shipping

We have a client, a US manufacturer of armored vehicles for foreign & domestic governments that contacted us (ETC International Freight System) to ship 2 armored vehicles to Jeddah, Saudi Arabia. The terms of sale between the supplier overseas consignee was FOB Long Beach. It meant that our client’s responsibility was to pay all charges from their site up to Long Beach until it was on board the ship.

With these terms in mind, the international freight company had to first determine which forwarder was assigned to the shipping from Long Beach to Jeddah. It can be a forwarder representing the consignee (buyer) in Jeddah or the shipper’s (supplier) freight forwarder (ETC International).

Once the forwarders are in place for handling the FOB & the ocean freight, a booking with the steam line is made by the international forwarder elected to ship from port to port. With this information, the supplier’ s forwarder (ETC Freight), retrieved the booking information & organized the container positioning, export declaration, and a bill of lading draft that must be confirmed by the shipper.


CONCLUSION:

FOB shipping means the buyer incurs responsibility of the shipment much earlier in the process. For buyers that are looking to have more control early on, this is the best way to go about it.

If you would like to learn more about whether FOB shipping is an option for you, or if you would just like to know more about freight terminology in how it relates to your business, schedule an appointment with ETC International today!

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