Wyoming Business Tips for Oct. 15

A weekly look at issues facing Wyoming business owners and entrepreneurs from the Wyoming Small Business Development Center (WSBDC) Network, a collection of business assistance programs at the University of Wyoming.

By John Privette, regional director, WSBDC

International trade involves a lot of rules, regulations and terms that can be confusing to a small-business owner. But that shouldn’t stop you from expanding your market outside of the United States.

Free on Board (FOB) is one of the oldest shipment-delivery terms in the books and sets the conditions for when the seller is free of all risks in regard to the exporting process. Here’s what you need to know about FOB if your business is currently exporting outside of the U.S. or is looking to do so in the future.

According to the Incoterms 2010 rules (the standards for trading terms and conditions), FOB means the seller (exporter) fulfills delivery obligations and ends his or her risk when goods are loaded on board the vessel appointed by the buyer at a specified port or waterway on the seller’s side. The FOB condition only applies under the following criteria:

-- Restricted to sea and inland waterway transport.

-- The buyer selects freight forwarder, contracts carriage and pays for freight to destination.

-- Neither the seller nor the buyer has any obligation to each other to obtain a contract for insurance.

-- Applies to goods lifted across the ship’s rail (except containerized shipments), liquid cargo transferred to the ship in hoses and loose bulk cargo filled from silos.

Having an understanding of these conditions beforehand allows you to evaluate the obligations and risks involved when exporting and preparing a sales contract.

Exporting your product may seem like a daunting task, but there is plenty of help available in Wyoming. For more questions about FOB, Incoterms 2010 or anything else related to exporting, email jprivett@uwyo.edu.

A blog version of this article and an opportunity to post comments are available at www.wyomingsbdc.org/blog1/.

The WSBDC Network offers no-cost business expertise and technical assistance to help Wyoming entrepreneurs think about, launch, grow, reinvent or exit their businesses. The WSBDC Network is hosted by UW with state funds from the Wyoming Business Council and funded, in part, through a cooperative agreement with the U.S. Small Business Administration. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu, or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.