Under FOB terms – who should bear the charges for issuance of B/l : Shipper or Consignee??

This question is one that has been raging in the Freight & Logistics Professionals Group in the business networking portal LinkedIn for some time now.. There have been many comments to the same, some logical, some not..

I thought i would throw this question out to the readers of this blog and see what your views are on the same..

Under FOB terms – who should bear the charges for issuance of B/l : Shipper or Consignee??

It is a thought provoking question and i hope we can get some good answers here..


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31 thoughts on “Under FOB terms – who should bear the charges for issuance of B/l : Shipper or Consignee??

Be part of the discussion and share your views about the article here..

    • ENS PAID BY CONSIGNEE AS ENS IS THE INFO OF IMPORT GIVEN TO DESTINATION CUSTOMS BY SHIPPING LINE, SO IMPORTER HAVE TO BEAR THE COST NOT EXPORTER…IF TERMS ARE CIF THEN EXPORTER WILL BEAR IT..

      THANKS A LOT.
      VIKAS SINGH CHAUHAN

  1. For me, this issue is pretty much clear! The charges for issuance of B/L should bear a consignee, NOT a shipper. Why so?
    An order to get a shipment on board comes to carrier from the consignor, not from the shipper. The consignor chooses the carrier and is responsible to pay haulage for his services. Actually, the shipper has no relations to the carrier. Ones the shipper is responsible for, is to get the shipment loaded on board. So he overtakes THC charges.
    The B/L will be issued for the consignor, NOT for the shipper and for the consignment, over which the consignor takes all risks and which is already in his ownership.
    So, by FOB term this is the consignor who bears B/L’s fee.

  2. Hi Sirs,

    I want to buy golf equipment from a seller in USA
    for my business in my country. Should I choose FOB or CIF ?

  3. Hey,

    I was wondering how you obtained the capital to fulfil the ‘Bill of Lading’ if your payment terms are under a Letter of Credit? Is it the case that you require funding beforehand to facilitate the transportation and obtain the Bill of Lading or is the norm to have shipping covered by a prepaid (that is the bank releasing just enough money to cover shipping costs say 15%) Letter of Credit?

    Working as an international trade broker with limited start up funds available this is a very pertinent detail I feel has been left out of most of the articles online (yours have been very helpful at least 😀 )!

    I look forward to your response!

  4. All comments are export view oriented. What about the impoter ?; and what about the description of the services covered by these charges ant to what effective performed service are they related ?; for instance, the B/L fee, what costs are covered ? Shouldn`t they be included as part of the freight ? Why is there a separate cost for the issuing of the B/L if this is an obligation of the carrier under Hague Rules ?

    • Hi Javier, one persons import is the other persons export.. The bill of lading fee is a fee charged by the shipping line for the processing of the bill of lading on behalf of the client.. The question is whether this charge should be paid by the shipper who is responsible for the cargo to be delivery FOB or since this charge is incurred after the cargo is loaded on board, then should it become the liability of the consignee..??

  5. Dear Sirs,
    Please let me know the basic charges that we have to pay in mostly used Incoterms,
    For Examples in FOB as a shipper we have to pay THC + BL Charges + Agents Fees

    Thank you in advance

    Kind Regards
    Pillai

  6. Hi RK, Trust the handling fees will be forwarders fee which is part of export clearance. THC and B/L charges are actuals payable to Port/Line.

  7. Hi, Any charges raised prior to the cargo being loaded and stowed on board the vessel are for the shipper under FOB. The shipper is responsible for the export clearance of the cargo and thus the forwarder’s fee is part of the export clearance.

  8. Hi , We are the supplier , For an FOB shipment , apart from the Terminal handling charges , and BL charges , the forwarder is also asking for some “Agents Handling” . Whats this handling charges ? We should give that ? Kindly advise.

    • Hi RK, this would most probably be the Forwarders charges for handling the shipment.. The Terminal Handling and Bill Charges are the actual port and line charges and the Agents Handling would be the fee for the Forwarder..

  9. Please remember that under Incoterms (R) 2010 rules, FOB is no longer “over the ship’s rail” but “stowed and secured” on board the vessel. Thus once cargo is stowed and secured, a bill of lading can be issued by the vessel. The bill of lading is a contract between the shipper and the vessel to move the cargo safely to the agreed place of delivery.

  10. The party entering into contract of carriage with carrier (ie consignee for FOB based, is the one that has to settle costs related with issuing of BL by carrier.
    Shipper can be nominated (‘contracted”) by consignee to attend to this function but costs for BL remain for acccountability of consignee for FOB based shipments.
    Shipper should request Mates’s receipt as proof of hand over consignment to carrier for FOB shipments (over ship’s rail).

  11. Hi,

    The FoB clause stipulates that shipper is responsible to get the goods onboard the ship,
    therefore shippers becomes responsible for the local charges upto the onboard activity.
    by this shipper becomes responsible for the B/L also and hence shipper should pay for the bill fee.

  12. I guess it really doesn’t matter at the end of the day, although the consignee as the buyer would want to insure that his product arrives “safe and sound”.

    But at the end of the day whom ever pays these charges is the end user as the price will in either way be reflected on the cost of the product, I guess the best would be whom ever can get a cheaper rate.

  13. Albert my comment is on General fob contract. if there is any clause in the contract regarding issuance of the bill of lading (bill of lading to be issued either at destination or elsewhere) then in that case they may have a mutual agreement but in general if there is no such clause in the contract and bill of lading is issued to the shipper at port of loading then the shipper will pay for the bill of lading fee.

  14. I am not agreeing with Jag. This is purely an agreement between shipper and receiver and same depends on where ther B/L will be issued. Some consignees require B/Ls to be issued at destination wherein they can submit amended SI’s based on who they would sold cargo to. In this isnatance, they will foot B/L fees.

  15. In FOB terms shippper is responsible to load the cargo on board the vessel free of any cost to the consignee which mean shipper is responsble for all the relevant cost until cargo crosses ship’s rail. Once it corosses ship’s rail it becomes the consignees responsibility and hence responsible for all freight related charges. But the bill of lading fees is not the part of freight related charge and hence shipper is responsible to pay for same prior he collect it from the shipping agents/line. Moreover, bill of lading is local charge and it varies from country to counttry.

  16. In my opinion the B/L is directly related to the freight and not the FOB’s so I would always insidt that the freight payer pays all B/L costs and charges unless otherwise agreed between the seller and buyer.

  17. Depends on the purchase contract! Generally though, if the shipper wants / needs as bl then he pays for it, irrespective of what the Incoterms book says

  18. B/L fees remittance based on the agreement between the Shipper and the receiver and also based on where the B/L is issued. As the B/L fees can be interpreted as the cost of documentation logically should collect at the Port where the B/L released to either Shipper or consignee.

  19. It all depends what agreement has been made between shipper and receiver and where the B/Ls are going to be issued. If they are issued at origin, shipper should pay and under normal circumstances, if B/L is issued at destination, receiver should pay. Operationally this becomes easier to manage. Trust many people will agree with me.

  20. I feel the Shipper should be responsible for issuance of the b/l as cargo is “free on board”.Therefore the seller has an obligation to take care of all costs pertaing to the shipment of the goods to a named place.