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Back-to back LC

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Tue, 09/14/2010 - 00:54
Aidateo
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Joined: 08/21/2010
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Hi,

Our term with our client is CFR at port of discharge and FOB at port of loading with our manufacturer in China.

Will this term cause any discrepancy when presenting the documents for payment to the issuing bank?

Pls advise.Thanks.

Nik

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Tue, 09/14/2010 - 10:32
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alves_renato
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Joined: 03/23/2009
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Back to Back, LC and Incoterms.

Dear Nick:

We handle such operations in Brazil and apart from LC we got issues with certificate of origins that require FOB value. Keep that in mind.

Regarding your enquiry, I would tell you that yes, you should face discrepancies, unless you revise the terms. Let's see it together:

a) Primary Invoice Manufacturer x Your Company is FOB, then Bill of Lading would say FREIGHT COLLECT ;

b) Secundary Invoice Your Company x Final consignee will be CFR, then BL should mention FREIGHT PREPAID.

c) If you cannot rearrange the negociation for FOB on both sides, I would recommend you to specify on the LC that BL should mention "FREIGHT PREPAID ABROAD", what of course means a third party will prepay the freight, which is neither shipper not consignee. It will be you.

You are suggested to discuss this picture with the Shipping Line and Freight Forwarder responsible for the seafreight, after all, they must acccept this clause.

In case you find difficult organising it, please let me know. My email is renato.space@uol.com.br; Just make sure you use a good subject since I receive thousand of emails.

Best Wishes,

RAF - Renato A. Florencio, DF Brazil

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