Our company has engaged an export agent, and now we are facing the issue of ocean freight payment. We are unsure who should pay this cost—the principal (us) or the agent? The contract did not specify this. Also, at which stage of the export process is the ocean freight typically paid? We hope experienced friends can help clarify this so we can handle the matter properly and avoid future disputes.
In Guangzhou, planning to use export agency services for goods and inquiring whether tax payment is required, the types of taxes involved, and the tax payment process. The best answer indicates that if the goods qualify for tax refund, the "exemption, credit, and refund" policy applies; otherwise, they are treated as domestic sales subject to tax. The main taxes are VAT and consumption tax, with the refund process being relatively complex and requiring accurate preparation of documentation.
The company has engaged an import agent for import business but is unsure how to pay the agent, inquiring about payment methods, their pros and cons, and the timing of payments. The best answer suggests that payment methods include wire transfer (T/T), letter of credit (L/C), and collection, with T/T being fast but requiring accurate information, L/C being secure but involving cumbersome procedures, and collection being high-risk due to reliance on commercial credit. For payment timing, a 30% - 50% deposit can be paid in advance, with the balance paid after the goods arrive and pass inspection.
Our company intends to find an agent to handle export business and has doubts about who will receive the goods payment and who will pay in the agency export, fearing problems in the capital transactions. The best answer points out that generally the agent receives the goods payment and transfers it to the consignor after deducting the fees. The export-related fees are usually borne by the consignor and can be prepaid by the agent on behalf of the consignor. The specific arrangements for receiving and paying should be clearly stipulated in the agreement.
The company plans to engage in export business and wants to understand how agency fees are charged for exports, including the charging method (percentage of order value or other methods), whether there are industry-wide standards, and payment timelines. The best answer indicates that it is common to charge 1%-5% of the order value or a fixed fee per order, with no unified industry standard. Payment timing is negotiable, and options include upfront payment or payment upon completion.
Have questions about agent import payment settlement methods, processes, and precautions. The best answer indicates that payments are usually made to the agent, with an agreement signed first to clarify terms, followed by payment at the agreed time and method, after which the agent settles with the foreign party. Close communication, accurate account information, and keeping payment records are essential. Other answers also supplement key points like following the agreement and paying attention to exchange rates.
The company plans to use export agency services and wants to know who receives the most payment during the process, hoping to ensure smooth export procedures and reasonable payment distribution. The best answer states that generally the principal receives the most payment, while the agent mainly collects a commission calculated as a certain percentage of the export goods' value. However, special circumstances like product quality or unique profit-sharing models may affect payment distribution.
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Professional consultant answers
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
In agency export transactions, there is no fixed rule for who pays the ocean freight; it mainly depends on mutual agreement. If the contract is unclear, industry practices or specific business circumstances usually determine the responsible party.
Generally, if the agent only provides pure agency services without involvement in the sale of goods, the ocean freight is often paid by the principal. This is because the principal owns the goods and bears the transportation costs.
From the export process perspective, ocean freight is typically paid after the goods are loaded onto the vessel but before the bill of lading is issued. This ensures the freight forwarder or shipping company can arrange the bill of lading for subsequent operations like cargo pickup. It is advisable to negotiate with the agent promptly and amend the contract to clarify payment responsibilities to prevent unnecessary conflicts.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Usually, the party responsible for arranging transportation pays the ocean freight. If the agent handles tasks like booking cargo space with the freight forwarder, the agent is more likely to pay. However, the final decision depends on mutual agreement.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
Market practices may also apply. If it is customary for the principal to pay ocean freight in your region, then the principal will likely bear the cost this time. You can inquire about industry practices.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
If the agent charges a higher service fee that includes transportation, the likelihood of the agent paying the ocean freight increases, as the fee covers such services.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
Sometimes, trade terms determine the payment. For example, under FOB terms, the foreign buyer usually pays the ocean freight. Under CIF or CFR terms, the seller (principal) typically bears the cost. In agency exports, it depends on the agreement between the principal and the agent.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
If the agent has strong bargaining power and can secure favorable freight rates, the agent may pay the ocean freight and incorporate the cost into the service fee.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
You can refer to similar agency export cases to see how others handle this issue and use it as a reference for negotiations with your agent.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
Consider the transfer of risk. If the principal bears the risk before shipment, it is more reasonable for the principal to pay the ocean freight to align costs with risk.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
If the agent has a long-term relationship with the freight forwarder and enjoys preferential rates, the agent may pay the ocean freight and leverage this advantage for mutual benefit.