How to Deal with the Risk of Delivery without Bill of Lading under FOB Terms?

In international trade, FOB is a common delivery method. However, in recent years, there have been many cases where the buyer colludes with the freight forwarder, resulting in the risk of delivery without bill of lading, leaving the seller without both money and goods. So, how to deal with this risk and protect ones own rights and interests?

Buyer Controls Freight Forwarder:In FOB transactions, the buyer usually designates the carrier, especially an overseas freight forwarder. This gives the buyer more control over the transportation process.

Risks of Bill of Lading:The freight forwarder can directly obtain the master bill of lading and send it to its foreign agent at any time. If the foreign freight forwarder does not require the consignee to return the original bill of lading, the bill of lading in the sellers hands may become invalid.

Specify the Loading Time:Clearly stipulate in the contract the time for the buyer to send the ship to the port for loading to avoid the situation where the goods are ready but the ship is late.

Increase the Deposit Ratio:Increase the proportion of the deposit to reduce the possibility of the customer going back on their word.

Selection of Freight Forwarder Company:Negotiate with the buyer and specify the freight forwarder in the contract, and this agreement should not be limited to a specific company. It should be noted that if the carrier or its bill of lading has not been filed with the Ministry of Transport of China, in - depth consideration is required before cooperation. Because the filed bill of lading and carrier need to pay a certain amount of security deposit, which enhances the security of the bill of lading. If the buyer insists on their choice, the seller should weigh the relevant risks. The best practice is to choose a well - known shipping company and use its bill of lading, and avoid using the overseas freight forwarder designated by the buyer and the bill of lading issued by it. At the same time, the cargo owner should ensure that the domestic freight forwarder provides a guarantee when representing the overseas freight forwarder in handling the shipping procedures. This guarantee should clearly state that after the goods arrive at the destination port, the goods can only be released upon presentation of the original bill of lading circulated by the bank.Letter of CreditIn this way, if the situation of releasing goods without the bill of lading occurs, the cargo owner will have a basis for claiming compensation.

Maintain Control:In FOB export transactions, the contract should clearly stipulate that the consignor is responsible for entrusting the freight forwarder or non - vessel operating common carrier (NVOCC) to book space with the shipping company. This is because the obligations of booking space and delivering goods are inseparable. Therefore, the right to book space should not be given to the buyer. In the shipper part of the bill of lading, the name of the consignor (i.e., the seller) should be indicated to ensure that the consignor has full control over the goods. If the buyer has a good reputation and has a need to resell the goods in transit, it can be considered to be listed as the shipper. However, if the creditworthiness of the buyer is not well - understood, for the sake of safety, the best practice is still to have the seller as the shipper.

Use Order Bills of Lading:Choose an order bill of lading with the issuing bank as the consignee, so that the bank controls the right to the goods and reduces risks.

Insure with Sinosure:To hedge risks, you can choose to insure with Sinosure and understand the countries, regions and black - listed customers that it does not cover.

For the FOB delivery method, the seller must strengthen risk awareness and safeguard its own rights and interests through various strategies. This includes not only the careful setting of contract terms, but also measures such as negotiation with the buyer, selection of freight forwarders and insurance. Only in this way can the seller ensure its own safety and rights and interests in international trade.