FOB, CFR and CIF are the common incoterms. In Chinese export and import businesses the sellers should choose a right term against the risks of foreign exchanges based on the specific conditions of the businesses to raise economic benefits.

FOB:

FOB is short for Free On Board(…named port of shipment).

There are many derivative trade terms that stem from FOB:

FOB Liner Terms: the loading charges are paid according to liner terms by the seller, who pays for the freight.

FOB Under Tackle: the seller is responsible for delivering the goods to the place named by the buyer where the lifting hook can reach, and the charges of lifting are paid by the buyer.

FOB Stowed: the seller is responsible for loading the goods on board the ship and paying for the loading charges including the stowage fee. The stowage fee is paid for the placement and arrangement of the goods on board.

FOB Trimmed: the seller is responsible for loading the goods on board the ship and paying for the loading charges including the trimming charge. The trimming charge is paid for the trimming and arrangement the bulk goods.

I want to remind you that these terms are derived from FOB and are concerned only with the loading charges excluding unloading charges. Unloading charges only occur when the buyer is picking the goods up at the port of destination from the shipper, and it has nothing to do with the seller. It is stipulated in the shipping contract by the buyer and the shipper. Besides, FOB cannot transfer the risk, and the ship's rail will remain to be the border of the risk transfer without additional agreement.

CFR and CIF:

CFR and CIF determine who should pay for the unloading charges. The derivative terms of CFR and CIF are similar so I will list just those of CIF. They mainly include:

CIF Liner Terms: the unloading charges are paid by the seller who pays for the freight.

CIF Ex Ships Hold: the buyer pays for the unloading and lifting of the goods to the dock.

CIF Landed: the seller pays for the unloading of the goods to the port of destination. The charges include lighterage charges and dock charges.

On the basis of CIF, the goods are still delivered on the ship at the port of loading, and the ship's rail will remain to be the border of the risk transfer.

What is Symbolic Delivery?

The seller loads the goods at the port of loading and sends them to the buyer, and then the seller forwards all the qualified documents including documents of title to the buyer via some procedures (e.g.: documents against payment and letter of credit). So the obligation of delivery is finished, and the issuing (loading) date on the shipping documents is the "delivery date". This is so called "symbolic delivery". With contracts concluded on this term the seller is only responsible for loading but no guarantee for the arrival the goods. So this term is also called shipment contract, distinguished from the delivery contract.

FOB, CFR and CIF are all belong to Symbolic Delivery, and accordingly the buyer pay against documents, so shipping documents are of great importance for the deals concluded on these terms.