Comment on FOB being used for containerised freight

one of our contacts emailed the following response on Incoterms 2010 which you can also view via linkedin. Remember you can also follow S&H LLP on Twitter

Oh Sandra, how could I resist the opportunity of commenting on this?

1. why should we have extra risk and extra costs?
++You don’t, the risk has always been there because if you contract with your forwarder to pick up the cargo from the seller’s premises then surely you wear the risk from that point too. If you receive damaged LCL cargo how can you determine where that damage occurred, before or after your forwarder took delivery from the seller, before or after consolidation, before or after the container went on board the vessel? Clearly only the first and second are possible to track with any accuracy.

2. why should we try to control a forwarder in another country?
++ Because you do, simply by nominating your forwarder to handle the shipment.

3. why should we change what is working?
++ Incoterms 2010 doesn’t change what is working, they simply encourage you to call it the correct name.

4. why should we renegotiate contracts with freight companies?
++ Who is asking you to? You can negotiate with your seller that the terms are “FCA Seller’s premises, plus inland transport and THC” or “FCA Terminal, plus THC”. That means delivery occurs and risk pass to you when your forwarder takes hold of the goods, but the seller pays costs incurred in his country until the wharf, just like now. The freight cost typically includes stevedoring and loading the container on board.

5. why should we pay storage if the ship is loaded late?
++ why would that incur storage? If your forwarder took hold of the goods earlier than the receiving period for the vessel then you have to deal with why your forwarder didn’t book on an earlier vessel. It’s not the seller’s problem that your forwarder stuffed up.

6. why should we have to get involved in port security issues in another country?
++ You don’t, B10 of FCA clearly indicates that you must help the seller at his expense to arrange any security formalities required to export the goods, and you look after security formalities in your country of import and other countries through which the goods pass.
Bob Ronai • Australia