FAS versus FOB in Freighter Importing and Exporting

FAS is the acronym for Free Alongside Ship. FAS is only used for sea and inland transportation, though. FOB is the acronym for Free on Board and takes place when goods are delivered directly onto the vessel.

Some FAS Facts
• It is the onus on the seller to clear goods for export.
• It is the duty of the seller to get a license and any other authorisation for exportation and to deal with anything else to do with customs in order to export the goods.
• The seller has to deliver any goods alongside the ship which has been selected by the buyer and the agreed port on the agreed date.
• If anything should go wrong whilst the goods are loaded, then this account is for the buyer.
• It is the seller’s obligation to obtain proof of delivery, as it might not be possible to receive a transport document.
• Once the documentation has been offloaded, it is then the duty of the buyer to take possession of the goods.
• The buyer has to pay for the transportation of the goods from port to destination.
• The onus is on the buyer to receive import licenses and any documentation regarding importation of the goods to the final destination and also any transportation of these goods.
• If the ship or vessel is not on time, the onus of the costs will fall onto the buyer.

Some FOB Facts
• With FOB the goods are loaded directly onto a vessel as opposed to being loaded alongside the vessel.
• The onus falls onto the seller to clear goods for exportation and to arrange the export license and any other documentation.
• The seller is obliged to take care of the storage, handling and loading charges, but is not responsible for the goods to be taken from port to the destination.
• Once the goods are safe, the responsibility is then that of the buyer.
• The seller can arrange the sea freight, although it is the buyer’s option to select the ship or vessel; sometimes the seller is able to get a better deal.
• If the vessel is not on time, the buyer is obligated to re-imburse the seller for any costs incurred.
• As with FAS, it is the buyer’s duty to arrange the import documentation and license.

FOB or FAS; there are distinct advantages and disadvantages with both.

Doing Your Own Research Is Vital When Exporting Merchandise.

It is imperative that you do your homework when starting up any business. Forewarned is always fore-armed.

It is a challenge to find the correct foreign markets when you start an export business. There are product specifications to consider, language barriers to cross, cultural differences to iron out and also a whole host of other factors to take into consideration.

The state of the economy is also important as you want to get paid at the end of the day. If a country you are exporting to is not stable either politically or economically then you stand a strong chance of not getting paid. If the country you are exporting to is having political problems, it would be best to stay clear until the political situation calms down.

You might think that English is the language spoken everywhere, but statistics tell a different story altogether; this is most certainly one of the hurdles that will have to be overcome when exporting.

Here is a list of the world’s top 9 languages, other than English, that is spoken

• Chinese is spoken by 1,2 billion people.
• Arabic is spoken by 422 million people.
• Hindi; 366 million people.
• Spanish is spoken by 322 million people.
• Bengali; 207 million people.
• Portuguese; 176 million individuals.
• Russian; 167 million people.
• Japanese; 125 million people.
• German is spoken by 100 million individuals.

English is only spoken by 341 million people across the globe. With these statistics it is not surprising that you need to know your language “p’s” and “q’s” when it comes to overcoming the language barrier in exporting goods.

Many labels are required to be bilingual when labeling goods; alternatively there has to be a sticker in the destination country’s own language.

Individual labeling standards are required for:
• Medical goods
• Textiles
• Leather
• Clothing
• Foodstuffs
• Alcohol

There are many specifications that have to be itemised on these labels, too
• These are usually the brand, the purity of the product or a mixture that the product is made of.
• Country of origin.
• Name of manufacturer.
• Name of importer.
• Measurements, according to international standards.

Independent research is the key to exporting goods.

Durban Port Plays a Vital Role in SA Shipping

Port Volumes:

• Durban handles 4 554 sea-going ships, according to the financial year-end figures taken on the 31 March 2009; this means that Durban handles the largest number of sea-going traffic of any port in Southern Africa.
• Cargo handled amounted to an excess of 74 683 597 tonnes; including petrol and oil products.

Facilities at Durban Port

• The port of Durban consists of 5 business units that are managed by Transnet Port Terminals.
• Other terminals in the port, however ,are owned and operated by private companies

Private Terminals

• Bluff Coaling Terminal, which is also known as Bulk Connections
• Island View
• The Fresh Produce Terminal at the T-Jetty
• Another fruit terminal at Maydon Wharf
• The Sugar Terminal
• The Wood Chip Terminal on Maydon Wharf
• SA Bulk Terminals (Rennies), which has terminals on both Maydon Wharf and Island View.

There are numerous terminals that are provided for sugar, citrus, grain and also passengers.

A well-equipped terminal is also provided for ease of access for cruise ship liners. Durban Port offers ship repair facilities which consist of a graving dock and this is divided into two compartments; these are serviced by five electric cranes, although not all the cranes are operational all the time. There are plans in the pipeline to build a private dry dock at the Dormac Marine Shipyard.

If it is freighting you are interested in, then chances are you will use the Port in Durban for the export or import of your goods.

Think Globally When Exporting

When embarking on exporting for a livelihood, you have no choice but to start thinking internationally and globally; the first stumbling block that you are likely to encounter would more be fierce competition from both manufacturers and producers from across the world.

Survival is the key word when it comes to strategizing this kind of business. Forget about traditional ideas in order to swim and not sink.

Always remember

• To implement a long-term plan, and scrap short-term and pointless objectives that are aimed at traditional narrow-mindedness.
• Remember as with many industries, returns cannot be expected immediately. It usually takes a 12 to 18 month period to start reaping your rewards.
• It takes literally years to build strong relationships with suppliers and potential customers; here again, this usually applies to all industries and not only to importing and exporting.
• “Stickability” is the key word here – if you ARE willing to persevere you will most certainly reap the rewards, and see results.

It is really quite challenging when doing your own research in finding the right foreign markets; there is a wide range of product requirements, and there is usually a lot of red tape to get past. One has to consider getting past the language and cultural barrier in many instances. There is also the unknown competitive entity and also political barriers to get past which are all risky for those entrepreneurs who have backed the projects with their own money.

The most prudent advice that can be given is to do as much research as possible, when looking to starting an export business.

The legendary and notorious pirate Barbarossa was courageous enough to seize Algiers and rule it as a pirate base in the 17th century; shipping trade in the Mediterranean risked the threat of this “pirate navy”.

The full effect of a new wave of sea piracy in African waters has been burgeoning since the 1980′s, and is gradually growing in strength.

Listed here are a couple of facts regarding piracy and the effects it has on South African waters and shipping:

• Piracy is affecting international trade and lives on the seas right across the globe.
• Piracy could cripple shipping in Africa.
• Pirates attack fishermen, cargo ships, cruise liners and the supply of food to famine and war-torn poverty-stricken African countries.
• South Africa is an important sea trading nation, contributing at least 95% of the trade, thus is as affected by pirating as any other nation; perhaps more so.
• Currently piracy is affecting most of Africa, having spread from the horn of Africa and Somalia spreading to the Mozambique Channel.

How piracy had added onto the costs of shipping:

• Taking care of ships and cargo entails additional expense.
• Taking ships and diverting them as far away as possible from the troubled areas will increase fuel costs.
• Piracy has forced companies that cover maritime insurance to become extremely expensive.
• Vessels and ships that trade have been forced to add razor wire around the decks.
• Ships have put extra look-outs on their decks and have installed water cannons as this offers a good deterrent.

It is a sad state of affairs when pressure is mounting as to the value of supplying food and aid by sea to the impoverished countries of Africa.

The recent devastating effect that the earthquake and tsunami that Japan has suffered has had a negative domino effect on many industries right across the globe.

The motor industry has been hit really hard, and so has the fishing industry.
Some of the smaller ports in Japan have disappeared altogether; the oil refining industry has also been adversely affected.

As Japan slowly recovers and starts to rebuild, it will have to make use of other forms of energy besides making use of oil in the reconstruction of many industries and sectors; this is no doubt going to be a mammoth task. It is obvious that the demand for commodities, including coal, will be in great demand by this hard-hit and devastated nation as it starts to rebuild bit by bit.

Although companies such as Grindrod have been conducting business with Japan from time to time, it seems as though this will increase as the demand for commodities increases, thus escalating the shipping of essential supplies to this country.

Being able to get the commodities out of the port is often a problem; therefore the deliveries are not as fast as they should be.

Shipping in Japan is going to take a while to recover, but the Japanese are renowned for their hard work and tenacity, therefore it should be sooner rather than later that they are up and running as efficiently pre-tragedy

Grindrod is a shipping company which was founded 100 years ago by Captain John Grindrod; the company was started as a small shipping company that was based in Durban, and is in the continual process of growing and emerging into a powerful shipping and freight business.

Alan Olivier, CEO of Grindrod believes that there is lot more to shipping and owning ships as far as business is concerned.

It is therefore of particular interest that there has been an increase of 34% in the company’s revenue at the end of 2010; most of this revenue is not shipping-related. The majority of this income is derived from freight-related business.

Because shipping is renowned for being a volatile business, Grindrod will put focus and energy into their ports and terminals, as this will take away some of the pressure.

2010 was perceived as being tough for the shipping business on the whole; this is primarily due to the fact that there is an over-supply of ships and vessels.

It is obvious that there are more vessels that are all rivals and challenging each other for business, therefore rates will be adversely affected.

Grindrod has been spared this fluctuation as a contract is already in place. Due to this foresight it means that Grindrod’s shipping division is way ahead of its game.

Shipping is still the company’s largest part of the business.

Despite the fact that the shipping industry is taking strain globally, trading conditions for Grindrod have improved, both locally and internationally. There is a definite, positive upswing in trading for this company, and particularly in the merchandise that is being shipped by Grindrod.

Grindrod is a shipping company which was founded 100 years ago by Captain John Grindrod; the company was started as a small shipping company that was based in Durban, and is in the continual process of growing and emerging into a powerful shipping and freight business.

Alan Olivier, CEO of Grindrod believes that there is lot more to shipping and owning ships as far as business is concerned.

It is therefore of particular interest that there has been an increase of 34% in the company’s revenue at the end of 2010; most of this revenue is not shipping-related. The majority of this income is derived from freight-related business.

Because shipping is renowned for being a volatile business, Grindrod will put focus and energy into their ports and terminals, as this will take away some of the pressure.

2010 was perceived as being tough for the shipping business on the whole; this is primarily due to the fact that there is an over-supply of ships and vessels.

It is obvious that there are more vessels that are all rivals and challenging each other for business, therefore rates will be adversely affected.

Grindrod has been spared this fluctuation as a contract is already in place. Due to this foresight it means that Grindrod’s shipping division is way ahead of its game.

Shipping is still the company’s largest part of the business.

Despite the fact that the shipping industry is taking strain globally, trading conditions for Grindrod have improved, both locally and internationally. There is a definite, positive upswing in trading for this company, and particularly in the merchandise that is being shipped by Grindrod.

It is perceived that sea traffic and sea trade is full of inconsistencies.

Many product prices are attaining new highs, and have been progressively growing over a three year period.
There is a tendency towards shipping being in demand, particularly from leading traders such as India and China. There is a specific negation as demand is strong yet the rates for cargo that transport these commodities have been steadily on the decrease; this is prior to the commodity and trade boom.

Companies such as Grinrod are not exposed to the fluctuation, as they are well-prepared and have a contract that covers more than half of its fleet of 35 vessels. They might lose out on the swings but gain on the roundabouts.

There is no getting away from the fact that cargo rates are low, having an adverse affect on the entire shipping industry.

It is no secret that shipping across the globe is under pressure; many shipping companies are struggling and are unable to meet the contracts they put in place and are also unable to pay their debts to banks.

Contracts to cover such eventualities taken out years back seemed unnecessary at the time, but are certainly bearing fruit now.

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