Free On Board (FOB)

- Is a transportation term that indicates that the price for goods includes
delivery at the Sellers expense to a specified point and no further.
- The FOB term is used with an identified physical location to determine
1.) The responsibility and basis for payment of freight charges
2.) The point at which title for the shipment passes from Seller to Buyer.

The FOB location terms, Origin and Destination, may be qualified by

modifiers. The modifier determines the payment of the transportation
charges. Modifiers denote nothing about the title of the goods or filing of
claims. The most three common modifiers are: Collect, Prepaid & Add, and
Prepaid & Allow.
1.) Collect - The carrier collects the transportation charges from the Buyer.
2.) Prepaid & Add - The Seller prepays the transportation charges, but adds
the charges to the invoice for reimbursement from the Buyer.
3.) Prepaid & Allow - The Seller prepays the transportation charges and they
are already included in the contract price.

Title and Control of Goods

FOB ORIGIN
- Means that title to the merchandise passes at time and place of pick-up.
The Buyer assumes title and control of the goods the moment the
carrier signs the bill of lading.
The Buyer assumes risk of transportation and is entitled to route the
shipment.
The Buyer is responsible for filing claims for loss or damage.
FOB DESTINATION
- Means that title to the merchandise passes at time and place of delivery.
The Seller retains title and control of goods until they are delivered
and the contract of carriage has been completed.
The Seller selects the carrier and is responsible for the risk of
transportation.
The Seller is responsible for filing claims for loss or damage.

Cost Insurance and Freight (CIF)

- Use of this rule is restricted to goods transported by sea or inland
waterway. In practice it should be used for situations where the seller
has direct access to the vessel for loading, e.g. bulk cargos or non-
containerized goods. For containerized goods, consider Carriage and
Insurance Paid CIP instead. Seller arranges and pays for transport to
named port. Seller delivers goods, cleared for export, loaded on board
the vessel. However risk transfers from seller to buyer once the goods
 have been loaded on board, i.e. before the main carriage takes place.

Seller also arranges and pays for insurance for the goods for
carriage to the named port. However as with Carriage and Insurance
Paid To, the rule only require a minimum level of cover, which may be
commercially unrealistic. Therefore the level of cover may need to be
addressed elsewhere in the commercial agreement.

Further information:
This rule and CIP (Carriage & Insurance Paid to) are the only two rules
that place an obligation on the seller to arrange insurance for the
consignment. Note that this insurance covers the buyers risk, because risk
will pass from the seller to the buyer before the main carriage.

Bill Of Lading
- Bill of lading (BOL) is one of the most important documents in the
shipping process. To ship any goods, a bill of lading is required and
acts as a receipt and a contract. A completed BOL legally shows that
the carrier has received the freight as described and is obligated to
deliver that freight in good condition to the consignee.

The information in the bill of lading is critical as it directs the actions

of personnel all along the route of the shipment - where it's going, the
piece count, how it's billed, and how it's to be handled on the dock and
trailers. It could be on a prepaid or collect basis.

The consignee has to check whether the shipment is collect on delivery

which means that the driver will collect the cost of the merchandise on
delivery of the freight.

The Who of your Bill of Lading:

Much like a ticket, it outlines the players involved with your shipment,
including:
- The shipper & consignee of the goods
- The carrier who issued the Bill of Lading
- The origin freight forwarder
- The destination freight forwarder / arrival agent who handles your
shipment when it reaches the U.S.
- The freight payer either prepaid or collect which indicates who is
paying for the transportation. This will either be the seller or buyer.
Who pays is indicated by the Incoterms, a very important part of the
negotiation between the seller and the buyer. Look out for a post about
Incoterms, coming soon!
The What of your shipment:
The Bill of Lading outlines what goods are being shipped and any
specific handling instructions. This information will include:
- The content of the shipment, e.g. hanging garments, electronics, food
- The type of inner packaging, e.g. boxes, crates, sacks, drums, rolls or
any number of ways that items are packaged
- The type of outer packaging, e.g. 1000 boxes on 10 pallets, or 40
container, said to contain (STC) 32 pallets
- Any identifying markings or characteristics
If the shipment is being transported by air, each shipment is labelled
with the airlines Master Airway Bill number (MAWB) and, in some cases,
the origin freight forwarders House Airway Bill number (HAWB).
- Specific handling instructions, e.g. keep upright, keep cold, avoid
freezing, fragile, etc.
- Any specific requirements should always be addressed with your
supplier, forwarder, or carrier before shipping. Additionally,
consider obtaining a quote for cargo insurance. Damages happen
more frequently than you might think.
- The weight and volume of your cargo

The Where of your precious cargo

The Bill of Lading maps out the journey that your shipment will
undertake to get from your seller to you, with details such as:
- The shipments origination
- The shipments destination
- The route it is taking to get from one place to the other
- The date the shipment is received for transport
- The flights / vessel(s) / trucks the shipment is planned to move on

Cash on delivery (COD)

- Payment method in which ordered goods are carried to the buyer's
place but are handed over only upon full payment. Also called collect
on delivery.
- Is a type of transaction in which the recipient makes payment for a
good at the time of delivery. If the purchaser does not make payment
when the good is delivered, then the good is returned to the seller. The
recipient can make payment by cash, certified check or money order,
depending on what is the shipping contract stipulates.
- This type of transaction usually takes place through a shipping
company and allows both the seller and the buyer of the product to
minimize the risk of fraud or default. COD allows the purchaser to pay
at the time of delivery instead of having to pay upfront. The purchaser
remits payment to the shipping company, which then relays the
payment back to the seller.
Ex Works (EXW)
Can be used for any transport mode, or where there is more than one
transport mode
This rule places minimum responsibility on the seller, who merely has to
make the goods available, suitably packaged, at the specified place,
usually the sellers factory or depot.
The buyer is responsible for loading the goods onto a vehicle (even
though the seller may be better placed to do this); for all export
procedures; for onward transport and for all costs arising after
collection of the goods.
In many cross-border transactions, this rule can present practical
difficulties. Specifically, the exporter may still need to be involved in
export reporting and clearance processes, and cannot realistically leave
these to the buyer. Consider Free Carrier (sellers premises) instead.
Other things to watch for. Although the seller is not obliged to load
the goods, if the seller does so, this is at the buyers risk!
In spite of its apparent simplicity, this rule presents many pitfalls for
both parties when used for cross-border transactions. Ex Works obliges
the buyer to undertake export procedures (obtaining of licences, security
clearances and so on.) The buyer may be poorly placed to do this. In any
event the seller is only obliged to provide assistance, at the buyers risk
and expense.
From the sellers perspective, there is the problem of obtaining
evidence that the goods are to be exported where VAT or sales tax is
charged on domestic sales, the tax authorities may require this. The
obvious alternative for cross-border transactions is Free Carrier (FCA)
sellers premises.

Delivered at Terminal (DAT)

Can be used for any transport mode, or where there is more than one
transport mode. The seller is responsible for arranging carriage and for
delivering the goods, unloaded from the arriving conveyance, at the
named place.
Risk transfers from seller to buyer when the goods have been
unloaded. Terminal can be any place a quay, container yard, warehouse
or transport hub. The buyer is responsible for import clearance and any
applicable local taxes or import duties.
Things to watch for:
The place for delivery should be specified as precisely as possible, as
many ports and transport hubs are very large. A useful rule, well suited
to container operations where the seller bears responsibility for the main
carriage. A common scenario is for delivery to a container yard (CY), in
which case there will usually be Terminal Handling Charges (THC) for the
account of the buyer. If the specified terminal is a clearance depot or
similar, then use of this rule is straightforward the goods can be
delivered uncleared.
 If customs procedures take place pre-delivery at a border, then the
goods can often be given a pre-clearance (transit) status and delivered
uncleared. However complications can arise if the goods have to go
through a clearance point before delivery. Clearance of the goods may
require close liaison between the carrier and the buyer, and where this
goes wrong, there can be delays and disputes about demurrage.

Delivered Duty Paid (DDP)

Can be used for any transport mode, or where there is more than one
transport mode.
The seller is responsible for arranging carriage and delivering the
goods at the named place, cleared for import and all applicable taxes
and duties paid (e.g. VAT, GST)
Risk transfers from seller to buyer when the goods are made
available to the buyer, ready for unloading from the arriving conveyance
This rule places the maximum obligation on the seller, and is the only rule
that requires the seller to take responsibility for import clearance and
payment of taxes and/or import duty.
These last requirements can be highly problematical for the seller. In
some countries, import clearance procedures are complex and
bureaucratic, and so best left to the buyer who has local knowledge.
Some taxes such as VAT are only payable by a locally-registered
business entity, so there may be no mechanism for the seller to make
payment. If the seller is willing to undertake the other obligations
associated with import of the goods, then the rule may be qualified, e.g.
Delivered Duty Paid (VAT unpaid)

REFERENCE

http://www.incotermsexplained.com/the-incoterms-rules/the-eleven-rules-
in-brief/

http://economictimes.indiatimes.com/definition/bill-of-lading

https://www.flexport.com/learn/what-is-the-purpose-of-a-bill-of-lading/

http://www.businessdictionary.com/definition/cash-on-delivery-COD.html

http://www.investopedia.com/terms/c/cashondelivery.asp