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Who Should Bear the Freight Costs During the Process of Export Tax Rebate by Agent?

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Our company has engaged an agent to assist with the export tax rebate business. In the whole process, freight costs are incurred due to the transportation of goods. Now we are really about who should actually bear these freight costs. Should it be us as the entrusting party or the agent? Are there any relevant industry regulations or practices in this regard? Will the bearer of freight costs be different under different trade terms? We hope that friends who are well-versed in this area can help us answer these questions. Thank you.

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Professional consultant answers

Sarah Zhang
Sarah ZhangYears of service:8Customer Rating:5.0

Document expertConsult

In the business of export tax rebate by agent, the determination of the party bearing the freight costs mainly depends on the specific provisions of the entrusting agency agreement. If the agreement clearly stipulates that the freight costs are to be borne by a certain party, then it shall be implemented according to the agreement.

From the perspective of industry practices, if it is the entrusting party that is responsible for the transportation arrangements of the goods, such as designating freight forwarders, etc., usually the entrusting party bears the freight costs. Because the entrusting party has more control and dominance over the transportation link.

There are also differences under different trade terms. For example, under the FOB (Free on Board) term, usually the buyer is responsible for arranging the transportation and bearing the freight costs; while under the CIF (Cost, Insurance and Freight) term, the seller is to bear the freight costs of transporting the goods to the destination port. Here, if the seller is exporting through an agent and there is no special agreement, generally the entrusting party bears the freight costs, because the entrusting party is the seller in the real sense. In short, first look at the agreement, and then refer to the trade terms and practices to determine the bearer of the freight costs.

Amanda Yang
Amanda YangYears of service:3Customer Rating:5.0

Cost control consultantConsult

Generally speaking, if the agency contract does not specify otherwise, whoever arranges the transportation shall bear the freight costs. If the entrusting party contacts the freight forwarder on its own to send the goods, then naturally the entrusting party shall pay the freight costs.

Andrew Huang
Andrew HuangYears of service:7Customer Rating:5.0

Supply chain optimization expertConsult

The trade terms are crucial. For example, under the EXW (Ex Works) term, it is the buyer who is responsible for picking up the goods and subsequent transportation, and the buyer bears the freight costs. So it is necessary to make a judgment in combination with the specific terms.

Elizabeth Li
Elizabeth LiYears of service:3Customer Rating:5.0

Compliance and risk managerConsult

It also depends on the service scope of the agent. If the agent is fully responsible for the door-to-door service, then it is very likely that the agent will bear the freight costs, but this will surely be reflected in the price.

Jennifer Wang
Jennifer WangYears of service:4Customer Rating:5.0

Market development consultantConsult

Usually, if the agent is only simply handling the export tax rebate procedures and not involved in transportation-related matters, the freight costs are most likely to be borne by the entrusting party.

William Yang
William YangYears of service:5Customer Rating:5.0

International logistics consultantConsult

From the perspective of risk, if the entrusting party wants to control the transportation risk and arranges the transportation by itself, it is more reasonable for it to pay the freight costs by itself.

Michelle Chen
Michelle ChenYears of service:3Customer Rating:5.0

Business coordination consultantConsult

In some cases, both parties can also negotiate to share the freight costs, which can balance the interests of both parties.

David Li
David LiYears of service:6Customer Rating:5.0

Senior customs declaration consultantConsult

If the agent has a long-term cooperative freight forwarder and can obtain preferential freight costs, it is also feasible for both parties to negotiate that the agent bears the freight costs, which can reduce the overall cost.

Joseph Zhou
Joseph ZhouYears of service:10Customer Rating:5.0

Senior foreign trade managerConsult

In actual operation, it is more beneficial for the overall business to let the party that has more advantages in controlling the transportation cost bear the freight costs.

The relevant questions or replies only represent the user’s personal stance and do not represent any views of this website.

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