Question from Jenny
Regarding the
chocolate importation. the chocolate manufacturer works with FOB, CIF and
EXWORKS TERMS. I did my web research but I still would like to
clarify. What would be the best option for me?
Answer
From SCORE Counselor,
a member of our team – Sue Quadrino
The difference in
shipping terms are:
FOB-freight on
board. Supplier is responsible for transportation from factory to
ship. Customs entry value is the FOB price.
CIF-terms are cost of
goods insurance and freight charge. Customs entry value is reduced by the
cost of the insurance and freight.
EXWORKS-importer would
cover cost of transportation to dock.
I would suggest that
as a new importer, Jenny get quotes for all 3 terms. Ultimately, I would
recommend that she buy FOB and she could then get quotes from shippers here for
freight (ocean or air) from Ecuador
to NY.
Her chosen broker will
inform her of duty rates, etc., but I expect that import duty for cocoa from Ecuador is
free. She would have to pay a Merchandise Processing Fee of .3464% with
a minimum of $25. There is also a very small percentage charged for
ocean shipments (Harbor Maintenance Fee). For new importers, and
especially with food products the first shipments may be examined by Customs,
costing approximately $500. Jenny has been informed of this by her broker.
Sue
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