Freight Forwarding Q&A

Who Shall Bear the Actual International Transportation Freight During Export Agency Business Operation

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I am a small and medium-sized seller engaged in export of cross-border daily consumer goods. I received orders from three different overseas customers this year, two with FOB terms and one with CIF terms, and I hired an export agency to handle the full process. When reconciling accounts recently, I found the agency charged me two additional service fees for international freight.

I used to think all freight under FOB terms is paid by overseas buyers, why should I bear it? A friend of mine encountered a similar situation some time ago, due to unclear agreement, his documents were detained and he had to pay port detention fees finally. I am very panicked now, worrying about the same problem.

I want to make it clear who shall bear the freight in export agency business? What is the classification standard under different trade terms? If the agreement is not clear, how can I remedy to avoid losses?

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Expert Answer

Robert
RobertYears of service：6Customer Rating：5.0

Warehouse Management AdvisorStart a Chat

The party liable for export agency freight is essentially directly linked with trade terms. Under the traditional mode，many export agencies blur the division boundary，shift the freight that shall be borne by the buyer to domestic principal，or charge extra freight service fees，which invisibly increases exporters' costs，easily triggers contract disputes，and even leads to port cargo detention，document detention，directly affecting order delivery. Many small and medium-sized sellers new to agency services are prone to fall into this trap.

The current mainstream optimization path is to clarify the liable party according to trade terms，Under FOB terms，international freight after departure from the port of shipment shall be borne by overseas buyers，while domestic short-distance transportation fees and terminal handling charges shall be borne by domestic principals，Under CIF/CFR terms，full-process international freight shall be borne by domestic principals，and the corresponding freight can be included in the accounting cost of export tax rebate.

If there is already an unclear agreement，you shall sign a supplementary agreement to clarify rights and obligations as soon as possible，sort out cost details at the same time，and adjust accounts in combination with export tax rebate cost deduction rules to avoid extra tax costs. This classification method has an extremely low access threshold，you only need to include freight division clauses into the agency contract at the initial stage of cooperation. It supports dynamic cost change measurement，and can help small and medium-sized export enterprises save up to 8% of hidden cost expenditure annually.

John
JohnYears of service：6Customer Rating：5.0

Export Tax Rebate AdvisorStart a Chat

Freight division shall be confirmed in combination with logistics nodes. Under FOB terms, the export agency is only responsible for operations from domestic section to the terminal, and international ocean freight is directly charged to the buyer by the shipping company designated by the buyer.

If the buyer requires the export agency to pay the freight on its behalf, written confirmation shall be issued in advance, and the advanced payment can be recovered from the buyer later. Without prior confirmation, the export agency shall not directly require the domestic principal to bear the international freight.

Under CIF terms, the export agency can book shipping space on behalf of the principal, the freight shall be paid by the principal in advance or after delivery, both require clear quotation in advance. If there is extra port change cost caused by overbooking and container rolling, the liability shall be divided according to the responsible party: if it is caused by the shipping company, you can apply for reduction and exemption from the shipping company; if it is caused by the agency's operation error, it shall be borne by the agency.

William
WilliamYears of service：10Customer Rating：5.0

International Logistics AdvisorStart a Chat

The division of freight bearing under different trade terms can be adjusted in combination with supply chain cost optimization. If the principal wants to lock the total export cost, it can choose to include freight into the all-inclusive quotation of the export agency, clarifying that it is borne by the principal.

If the principal wants to transfer the fluctuation risk of international freight, it can choose FOB terms, under which the buyer bears the international freight and the agency is only responsible for domestic operations. International shipping prices will still fluctuate greatly in 2026.

For goods with low value and large volume, choosing the buyer to bear freight can save nearly 10%-15% of extra costs caused by exchange rate fluctuations. You can flexibly adjust trade terms according to actual order situations and adjust freight bearing rules to meet the overall supply chain cost control requirements.

Olivia
OliviaYears of service：5Customer Rating：5.0

Senior Customs AdvisorStart a Chat

At the initial stage of cooperation, freight bearing division clauses must be written into the export agency contract, clarifying the freight bearing party for different logistics nodes, settlement process of advanced freight, and liability division for extra costs. If the agreement is unclear, according to industry practice, the service quotation charged by the export agency only includes agency service fees.

If it is not explicitly agreed that international freight is borne by the principal, it shall be borne by the liable party under corresponding trade terms by default. If a dispute has arisen, you can first sort out evidence such as trade contracts, agency contracts, communication records, etc., and prioritize negotiation for settlement.

If negotiation fails, it can be handled according to the dispute resolution clauses agreed in the contract. Clarifying rights and obligations in advance can avoid more than 90% of such disputes.

David
DavidYears of service：3Customer Rating：5.0

Business Development AdvisorStart a Chat

Different freight bearing parties correspond to different tax treatment methods. If the freight is borne by the domestic principal, it can be included in the dutiable value of export goods, and eligible ones can enjoy VAT input deduction. If VAT deferment mode is adopted, the freight can be included in the deferment base to reduce early capital occupation.

If the freight is borne by the overseas buyer, the freight advanced by the domestic principal does not need to be included in VAT taxable income, and can be treated as current account, no VAT is required, avoiding losses from overpayment of tax. It should be noted that complete materials such as advance payment agreement, payment voucher, bill of lading, etc. must be retained for advanced freight to meet the verification requirements of tax authorities.

Ella
EllaYears of service：10Customer Rating：5.0

Senior Financial AdvisorStart a Chat

Freight collection and payment shall comply with current cross-border foreign exchange collection and payment compliance requirements. If the freight is borne by the buyer, the domestic principal does not need to purchase foreign exchange for payment.

If it is borne by the principal, foreign exchange can be purchased and paid through the compliant channel of the export agency to enjoy a more favorable foreign exchange purchase rate. In 2026, CIPS RMB cross-border payment has covered most shipping enterprises.

If RMB is used for freight settlement, exchange difference loss can be avoided, and the foreign exchange collection and payment process is smoother. Collection of advanced freight shall be declared truthfully, and shall not be disguised as goods payment, to avoid affecting the compliance rating of foreign exchange collection and payment and triggering foreign exchange supervision risks.

Daniel
DanielYears of service：8Customer Rating：5.0

Legal AdvisorStart a Chat

Freight bearing situation will affect the document filing and tax rebate accounting of export tax rebate. For freight borne by the principal, the corresponding invoice and payment voucher shall be included in the export tax rebate document filing to meet the verification requirements of four-flow consistency. If the freight is borne by the buyer, the freight voucher does not need to be included in the filing, nor does the tax rebate income need to be adjusted.

If the principal advances the freight, the advanced freight shall not be included in the FOB price of export goods, to avoid affecting the accounting of tax rebate base, leading to wrong tax rebate declaration, triggering tax correspondence checks and affecting the tax rebate progress. Compliant sorting of freight vouchers can ensure the smooth completion of the tax rebate process.

Alexander
AlexanderYears of service：10Customer Rating：5.0

Senior Trade AdvisorStart a Chat

Dutiable value accounting for export declaration requires clear clarification of freight bearing situation. If the freight is borne by the buyer, the dutiable value under FOB terms does not need to include international freight, and can be declared directly according to the FOB price. If the freight is borne by the principal, when declaring exports under CIF terms, international freight and insurance premium shall be deducted, and adjusted to FOB price for declaration.

If freight information is filled incorrectly during declaration, it will lead to abnormal price review, trigger customs verification, and require document deletion and re-declaration for adjustment, which will not only delay customs clearance time, but also generate extra document modification fees. Accurate filling of freight information can ensure smooth customs clearance.

Note: We respect all users' opinions and contributions. However, comments and answers reflect the views of their respective authors only.
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