• Delivery commitment


    Offers and contracts must stipulate the point at which the exporter will have fulfilled their commitment to deliver, that is, the point at which risk and responsibility are transferred to the buyer.

    Free on board (FOB):the goods will be loaded at the sellers expense onto a vessel at the location stipulated in the contract, e.g. FOB Santos. The seller's responsibilities and risk end when the goods cross the ships rail, and from then on the buyer bears all charges and risk. (Under an ECC (European Contract for Coffee) FOB contract the buyer is responsible for insuring the goods from the last place of storage ahead of loading on board, e.g. the port warehouse, but this is not the case under the GCA FOB contract.) Most coffee contracts are FOB although the use of FCA contracts is on the increase.

    Free on truck (FOT)or free on rail (FOR): in landlocked countries the sale is often FOT or FOR, with buyers themselves arranging transport to the nearest ocean port and onward carriage by sea. International transporters, usually linked with shipping lines, often offer one-stop services, taking the goods in hand in Kampala, Uganda, and delivering them to Hamburg, Germany, for instance, using a single document known as a combined bill of lading covering both inland and maritime transportation*. The exporter provides the customs clearance documentation.

    Free carrier (FCA):risk of loss is transferred when the coffee is delivered to the freight carrier at the place of embarkation. All freight charges, including loading onto an ocean vessel, railcar, trailer or truck (combined bill of lading), are payable by the buyer. The exporter provides the customs clearance documentation.

    Cost and freight (C&For CFR): the seller is responsible for paying costs and freight (but not insurance) to the agreed destination.

    Cost, insurance, freight (CIF):the seller is also responsible for taking out and paying the marine insurance up to the agreed point of discharge. Very rarely if ever used nowadays.

    In all cases it is the sellers responsibility to deliver the shipping documents to the buyer. When a parcel is loaded on board ship, a mate's receipt is issued to the ships agent.
    This is the legal basis for the bill of lading (B/L), which should be prepared and issued immediately. Shippers are entitled to the B/L as soon as the goods have been loaded. Some agents release them only once the vessel has sailed, but this is incorrect and causes unnecessary cost.

    The International Chamber of Commerce's Guide to Incoterms (2000) contains a more detailed description of these and other shipping terms. However, the standard contracts used in the coffee trade all state or imply that under an FOB sale too the seller is responsible for booking freight space, arranging shipment and producing a full set of shipping documents. These stipulations in standard coffee contracts differ from, and supersede, the Incoterms definition of FOB.

    * Unless special arrangements have been made with the carrier, such shipments must be re-stuffed at the port of shipment if an LCL bill of lading is required.

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