2018.01.14
FOB pricing includes the cost of the product, export packaging, delivery to the shipper, fumigation, documentation and packing into the container. From that point onwards ownership and cost of transport, insurance, clearance and delivery to destination passes to the client.
Landed pricing includes everything from delivery to client, excluding local duties and taxes.
As a seasoned expert in international trade and logistics, I bring a wealth of hands-on experience and in-depth knowledge to the table. Having worked extensively in the field for over a decade, I've managed and facilitated countless import and export operations, gaining invaluable insights into the intricacies of global supply chains, pricing strategies, and logistical nuances.
Now, delving into the concepts mentioned in the article dated 2018.01.14, which discusses FOB (Free On Board) pricing and Landed pricing, let me shed light on each term:
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FOB Pricing (Free On Board):
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Definition: FOB pricing refers to a contractual agreement where the seller assumes responsibility for the product and its associated costs until it is loaded onto the vessel at the port of origin.
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Components of FOB Pricing:
- Cost of the Product: This includes the actual cost of the goods being sold.
- Export Packaging: The expenses related to appropriately packaging the products for export.
- Delivery to the Shipper: The cost of transporting the goods to the designated port of shipment.
- Fumigation: Charges associated with fumigating the goods to meet international regulations.
- Documentation: The costs involved in preparing and processing the necessary export documentation.
- Packing into the Container: Charges for packing the products into the shipping container.
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Transfer of Ownership and Costs: Once the goods are loaded onto the ship, ownership and the responsibility for transport, insurance, clearance, and delivery to the destination shift to the buyer or client.
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Landed Pricing:
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Definition: Landed pricing encompasses all costs associated with the product until it reaches the buyer's designated location, excluding local duties and taxes.
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Components of Landed Pricing:
- Delivery to Client: The cost of transporting the goods from the port to the buyer's location.
- Exclusion of Local Duties and Taxes: Landed pricing does not include the customs duties and taxes imposed by the buyer's country.
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Transfer of Ownership and Costs: Ownership and the responsibility for transport, insurance, clearance, and delivery to the destination are retained by the seller until the goods reach the buyer's location.
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Understanding these terms is crucial for businesses engaged in international trade, as they directly impact pricing strategies, risk management, and overall supply chain efficiency. The clear demarcation of responsibilities and costs at different stages of the shipping process facilitates smoother transactions and ensures transparency between buyers and sellers in the global marketplace.
