Gross Margin after Freight Duty and Payment Terms
Landed gross margin incorporates freight, tariffs, and handling into unit stock costs, while payment terms dictate the working capital required to carry transit inventory.
Incoterms FOB
Meaning
Maritime trade clauses establish seller responsibility for export preparation and vessel loading while shifting financial risk to the buyer once cargo rests on board. Ocean freight contracts incorporate incoterms fob to mark the precise physical point where transit costs and transport risks pass to the purchasing party. The rule governs ocean container shipments, bulk maritime cargo, port origin loading and export customs clearances.
It stops applying once cargo passes the vessel rail and rests securely inside the ship hold.
Loading Responsibility
Suppliers pay inland freight, port terminal handling charges and export documentation fees at origin port. Under incoterms fob, the vendor remains liable for damage during truck transport to the dock and crane loading. Pre-shipment inspections confirm goods match purchase orders before title transfers on the vessel deck.
Transit Risk
Buyers assume financial loss if container damage occurs during ocean passage or final port discharge.
Vessel Limitation
Ocean shipment terms apply exclusively to sea transport and inland waterway freight, making them unsuitable for air cargo or land transport. Procurement frameworks applying incoterms fob require buyers to arrange marine cargo insurance and contract ocean carriers directly. Ground logistics operations require non-maritime terms like free carrier when goods transfer to container yards rather than direct vessel holds.