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Quoting a Price

Terms of Sale

Export terms of sale determine what costs are covered in the price of the cargo. They also indicate at what point ownership transfers to the buyer and at what point responsibility for the cargo transfers. International commercial terms (incoterms) provide "the international rules for the interpretation of trade terms." The International Chamber of Commerce (ICC) publications incoterms 1990 and GUIDE TO incoterms 1990 are the latest publications covering all trade terms. The more commonly used trade terms are:

• EXW (Ex Works...named point of origin)--The price quoted applies only at the point of origin, and the seller agrees to place the goods at the buyer's disposal at the specified place on the date or within the period fixed. All other charges are the responsibility of the buyer. EXW is sometimes referred to as Free on Board (FOB) ...packing house, warehouse, etc. Example: EXW Factory, EXW Warehouse, etc.
• FAS (Free Alongside Ship...named port of shipment)--Under this term, the seller quotes a price for goods that includes charges for delivery of the goods alongside a vessel at the port. The seller handles the cost of unloading and wharfage, loading, ocean transportation, and insurance costs are left to the buyer.
• FOB (Free on Board...named port of shipment)--Under this term, the seller quotes a price for goods that includes the cost of loading onto the transport vessel at the designated point. Ocean transportation and insurance are left to the buyer's account.
• CFR (Cost and Freight...named port of destination)-- For shipments to designated overseas port of import, the seller quotes a price for the goods that includes the cost of transportation to the named point of debarkation. The buyer is responsible for the cost of insurance. This is referred to as C & F in the old incoterms. The cost of unloading cargo at the port of destination is paid for by the seller, to the extent that they are included in the freight charges. If the charges are separate then they fall to the account of the buyer.
• CIF (Cost, Insurance, Freight)--Under this term, for shipments to designated overseas port of import, the seller quotes a price for the goods, including insurance costs and all transportation and miscellaneous charges, to the point of debarkation from the vessel or aircraft. The cost of unloading cargo at the port of destination is paid for by the seller, to the extent that they are included in the freight charges. If the charges are separate then they fall to the account of the buyer.

The terms of sale dictate the point at which the title of goods will transfer from the shipper to the consignee. Until such time as the title of the goods transfers from the shipper to the consignee, the shipper has a financial and an insurable interest in the safe arrival of the goods sold.

Determining Price

To calculate the cost of the export product, first determine the total product cost by multiplying the cost per unit by the number of units. Then add the following:

+ Profit
+ Commissions
+ Banking fees
+ Palletization/export packing
+ Freight forwarding and documentation fees
+ USDA inspection and phytosanitary certificate fees
+ Other direct expenses related to special shipping requirements such as temperature recorder charges

= EXW price

+ Inland transportation

= FAS price

+ Terminal handling charges

= FOB price

+ Ocean freight charges
+ Ancillary charges

= CFR price

+ Insurance

= CIF price

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