In international trade, the customs declaration process for export goods is crucial, with the completion of the Export Customs Declaration Form being the most critical step. Among the various fields on this document, the trade terms section demands particular attention.
As competition intensifies in global markets, efficient customs procedures can provide significant competitive advantage. This guide will help you accurately complete the trade terms section to ensure smooth customs clearance and timely delivery to your customers.
Free On Board (FOB)
FOB (Free On Board) means the seller delivers the goods on board the vessel and completes export customs clearance, transferring all risks and costs to the buyer. When completing the declaration form:
- Clearly mark "FOB" in the trade terms field
- Leave both the freight and insurance fields blank
This clear designation helps customs officers quickly identify your terms, improving clearance efficiency and minimizing delays caused by inaccurate information.
Cost and Freight (CFR)
Under CFR (Cost and Freight, also known as C&F or CNF):
- Enter "CFR" in the trade terms field
- Fill in the actual freight amount
- Leave the insurance field blank
While the seller arranges transportation to the destination port under CFR, insurance remains the buyer's responsibility. Accurate freight information ensures smooth customs processing.
Cost, Insurance and Freight (CIF)
For CIF (Cost, Insurance and Freight) transactions:
- Mark "CIF" in the trade terms field
- Complete both freight and insurance fields with actual amounts
CIF requires the seller to arrange both transportation and insurance, significantly reducing the buyer's risk during transit. Pay close attention to accuracy when completing CIF declarations to avoid clearance issues.
Key Terminology
Understanding standard trade terms is essential for accurate documentation and professional communication:
- FOB value : "Cost"
- Freight : "Freight" or "Carriage"
- Insurance : "Insurance"
- Carrier : The transportation provider
- Terminal : Transport terminal
- Delivered : Goods delivery status
- Duty Paid/Unpaid : Tax payment status
Proper use of these terms enhances communication efficiency and prevents misunderstandings in international transactions.
Conclusion
Accurate completion of trade terms isn't just a procedural requirement—it significantly impacts your entire export process. Whether using FOB, CFR, or CIF, each term carries specific implications and documentation requirements.
