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usually our export is on FOB and our buyer select the vessel. our shipping agent just arrange to ship the goods. but in case of CFR shipment, our buyer wants us to select the vessel. is it the procedure? besides how in CFR we should fix the price? if we are to select the vessel, then there will be some additional cost apart form freight. besides freight is not uniform.

Hi Pals,

Incoterms 2000 is quite clear on CFR (named port of destination)point A3 a)Contract of carriage:
-The SELLER must contract on usual terms at his own expense for the carriage of the goods to the named port of destination by the usual route in a seagoing vessel(or inland waterway vessel as the case may be) of the type normally used for the transport of goods of the contract description.

So ask your shipping agent about CFR Incoterms 2000, he will help you to find a proper vessel, than add freight and ancillary (if any) charges to your FOB price and invoice your buyer.

Other comments appreciated

Ciao

dear picant,

thanks for your answer on this issue. i always like your answers. i have a question. i often receive some export credit which did say that the shipment must be made using xyz freight forwarder or shipping line. do you think that in this case the buyer is selecting the shipping line although the term of shipment is CFR.

Hi Pals,

If you are beneficiary of a L/C stating that shipment must be made by XXX Shipping line or the like, you have to contact them (by fax or email, etc) requesting the disponibility to effect your shipments. So you will avoid the risks, having the goods ready to be shipped, that this XXX Shipping Line, duly contacted, answers "Sorry, we have no possibility to accept your Cargo" and you lose the protection of L/C. This is not a story, sometime it happened.

Other comments appreciated

Ciao

Although picant pointed out what can be really happen, usually exporter wants to make sure that they have a firm confirmation from a XYZ shipping line regarding shipping of goods on a named vessel during a period of time. For this reason they conclude a pre-contract named Booking Note whereby the carrier undertake to book space on a certain vessel for exporter at an agreed freight rate. So there will be no more answers like quote: Sorry, we have no possibility to accept your Cargo, unquote.
And to come back to the original question, yes the exporter will take care for arranging the vessel and will paid freight costs. The exporter has the possibility to negotiate freight rate, so better exclude any L/C terms stating shipment only by XYZ Shipping co, and the like as you will have no room for negotiation. Regarding the costs: You basically will pay additionaly the cost of transportation up to the port of discharge as all other costs at your end you are already familiar with: Export duties, Terminal handling charges, and other costs enabling your goods to pass ship's rail (FOB condition).