FOB Export Risks and Precautions

Yuxuan Wang, Fanhui Ma

School of Economics and Management, Shandong University of Science and Technology, Qingdao, 266000, China 

Abstract: FOB price term is a commonly used trade term in foreign trade. In recent years, the proportion of FOB terms in China's export contracts has become increasingly large, and even some foreign trade companies use FOB for most of their export contracts. Export FOB transaction can make the seller in the charter booking, insurance and other links to save energy and cost. However, FOB contract makes our exporters face more and more trade risks. This paper analyzes the risks of export contracts under FOB trade terms from the aspects of insurance, cargo connection, forwarder, bill of lading and settlement method, and takes measures to avoid risks.

Keywords: Risk transfer; FOB; Terms