Increasing freight rates can quickly sink your margin for any export sale. How do you protect yourself to ensure all costs are covered?
A majority of export sales are sold CIF (Cost, Insurance, and Freight). "CIF" indicates the seller is obligated to load the goods on the vessel, provide insurance coverage, and deliver to the buyers port of choice. Sales contracts should include Incoterms to define the buyer and sellers risks and obligations.
Current freight rates are at an all time high and expected to surge into 2022 for both domestic and international routes. Over the past year some international rates have risen well over 200% and still quickly growing. How can you protect your company from these rising costs?
Your contracts need a clause addressing the issue of "freight fluctuations". This clause clears up any ambiguity and prevents future conflict between you and your buyer by defining who pays the additional freight expense. Doing this when the transaction is contracted protects both parties.
For more information, contact AgCultured Consulting.