How to manage shipping and FOB from a brass jewelry factory?

Under the ICC Incoterms 2020 definition, FOB applies to sea or inland waterway transport. The seller completes export formalities and delivers the goods onboard the vessel nominated by the buyer at the named port. Risk transfers when the goods are onboard. The buyer generally selects and pays the main ocean carrier, handles import clearance, pays duties and taxes, and arranges insurance if required. A quotation should state the exact port, Incoterms edition, currency, payment terms, and whether local origin charges are included. Do not treat FOB as a door-delivery price; destination handling and inland transport remain outside the basic term.

Compare both offers on the same product specification, quantity, packaging, currency, Incoterms 2020 rule, destination, and delivery window. FOB normally excludes the buyer’s main freight, import clearance, duties, taxes, destination handling, and final delivery. DDP places substantially more delivery responsibility on the seller, but its feasibility depends on the seller’s ability to act as importer and meet the destination country’s tax and customs requirements. Request a line-by-line landed-cost estimate rather than comparing the headline unit price. Confirm whether insurance, inspection charges, bank fees, and special packaging are included, because these items can make apparently cheaper quotations misleading.

The seller is responsible for export clearance and for delivering the cargo onboard the vessel at the named loading port. The buyer normally nominates the vessel or freight forwarder and pays the main carriage from that point, along with import clearance, duties, taxes, destination charges, and onward transport. The commercial invoice and packing list should identify the parties consistently with the purchase order. Ask the supplier to identify origin-side charges separately, including terminal, documentation, and handling fees, because forwarders may quote these differently. For a small order shipped by courier or air, another Incoterm may describe the responsibilities more accurately than FOB.

At minimum, request a commercial invoice, packing list, transport document, purchase order, and shipment tracking or booking information. The invoice should match the actual seller, buyer, description, quantities, unit values, currency, country of origin, and agreed Incoterm. The packing list should show carton count, gross and net weight, dimensions, and contents by carton. Customs may also require product-specific information such as material composition, tariff classification, origin evidence, or test documentation. Ask the customs broker in the destination market which records are mandatory before dispatch; requirements vary by jurisdiction and by the way the goods are classified.

Start with the FOB purchase value, then add origin charges not included in the quotation, international freight, cargo insurance if purchased, destination terminal and handling fees, customs brokerage, import duty, taxes, inspection fees, domestic delivery, and payment or foreign-exchange charges. Divide the total by the sellable quantity, not merely the carton count. Use the correct tariff classification and customs valuation method for the destination market; a broker can validate these points before shipment. Build a sensitivity range for freight changes, currency movement, damaged or rejected units, and low-volume surcharges. This gives a more useful unit economics figure than multiplying the factory price by a simple freight percentage.

FOB is defined for sea and inland waterway transport under Incoterms 2020, so it is not the clearest rule for air cargo or courier shipments. For air shipments, FCA may better allocate delivery to the carrier and export clearance, while CPT or CIP can address carriage and, where applicable, insurance. The buyer should ask the forwarder and supplier to align the term with the actual transport mode. Confirm who pays pickup, export handling, airway-bill fees, insurance, customs clearance, duties, taxes, and last-mile delivery. Using an unsuitable label can create confusion over the point of delivery and risk transfer even when the shipment moves successfully.