Limited control: The buyers have limited control over the shipping process, like choosing the route, carrier, and schedule. If the buyer has strict delivery times and carrier requirements, this lack of control is disadvantageous.
Risk of transferring: The risk of loss or damage transfers to the buyer as soon as the goods are loaded on the ship. But the seller here arranges for the insurance of the goods and transfers it to the buyer to use.
Insurance coverage: The seller is responsible for the insurance, but it does not always meet the buyer’s requirements and can cause disputes.
Advantages and Disadvantages of FOB
FOB (Free on Board) is another commonly used Incoterm in international trade that comes with its own advantages and disadvantages. Some of them are as follows:
Great control over shipping: FOB allows buyers to have more control over the ivory coast phone number list shipping process as per their preferences and requirements for routes, carriers, companies, etc.
Transparency in cost: The buyer pays the cost for the carriages and insurance, which provides clear visibility for the shipping costs. The transparency here helps the buyers manage their budgets efficiently and avoid any extra charges.
Managing risk: When the goods are loaded into the vessels, risk is transferred from the seller to the buyer. This means the buyers can ensure that appropriate insurance is in place.
Flexibility: FOB provides flexibility to the buyers to handle logistics by choosing their own carriers, schedules, and supply chain operations. This increases the cost-effectiveness and efficiency of the shipping process.