11 Different Quotations of Prices Used in Foreign Trade

There are many types of price quotations. The types of price quotation to be given by the exporter depend upon the inquiry of the importer. The various quotations of prices which are used in foreign trade are:

(a) Loco price:

Also known as ex-works price it means the ex-warehouse price of goods. This price includes the cost of goods, packing cost and some normal profit.

Loco price or ex-works price = Cost of goods + packing costs = Normal profit.

All other charges are paid by the buyer. Usually the packing charges are specially mentioned as ex-works packing included or packing extra. Loco price quotations are rarely used in international markets. For most standard products, no buyer accepts ex-works price quotations.

But for products such as heavy machinery, when it is difficult to estimate the cost of transportation, shipping freight etc. ex-works quotations are accepted.

(b) F.O.R.:

It means free on rail. The price quoted includes cost of goods plus packing charges plus packing charges plus the cost of carrying goods to a railway station and loading them into wagons.

Delivery takes place at rail sliding while the goods and transit risks pass to the buyer when the delivery is made to the carrier. All other expenses are payable by the buyer.

(c) Free alongside ship (F.A.S.):

This quotation covers all the charges up to putting the goods alongside the ship to be paid by the exporter, while putting them on the ship is at buyer’s expense. The goods and transit risks are transferred to the buyer when the ship is able to load.

(d) F.O.B.:

It is one of the most common export terms meaning free on board. Under a F.O.B. quotation the exporter will deliver the goods. Free on board a ship as per contract at the port named, that is to say, he will pay all expenses and give delivery of goods on board the ship. The buyer has to pay for freight insurance and all subsequent expenses.

(e) Cost and freight (C. A.F.):

If we added shipping freight to the F.o.b. value we get C.&.F. price. It this case, the importer has to pay the insurance charges

C&F = F.o.b. + freight

(f) C.I.F.:

It means cost insurance and freight. Under a c.i.f. quotation the seller must ship the goods meeting all charges up to on board and pay freight insurance of goods also.

C.I.F. = F.o.b, + freight + insurance.

(g) Ex-ship price:

All expenses up to the time the goods arrive at the port of discharge are to be borne by the seller. The buyer has to bear the cost of taking delivery from the ship.

(h) In Bond price:

This price includes all those expenses incurred till the goods are carried to the bonded warehouse at the named port. Charges for the withdrawal of goods from the bonded warehouse have to the borne by the buyer.

(i) Landed price:

It indicates that all expenses up to the goods discharged on land at the port of destination are met by the exporter.

(j) Duty paid price:

This price includes all those expenses which are incurred on carrying the goods to the bonded warehouses, in the importing port and the import duties as well.

(k) Franco or rend u of free price:

It means that all the charges paid by the exporter up to and including delivery to the buyer’s warehouses and this includes duty as well as landing charges and internal freight costs. Delivery takes place when the goods arrive at their final destination.

Submitted by : Dr. Ridhaan, Category : Knowledge