In developed countries, it is well-known that when doing trade, exporters always try to sell on a CIF basis, while importers want to buy on an FOB basis. However, in Vietnam, most businesses are doing import and export in reverse: export FOB and import CIF. It has been a customary practice in the import-export activities in Vietnam for many years. Daco Logistics Company has been working to change this habit of Vietnam’s enterprises in order to help Vietnamese enterprises adopt a proactive stance, avoiding losses when entering the international market.
By doing the "Import FOB Export CIF" rule, Vietnam’s businesses can take the proactive role in transportation. They will receive preferential shipping, can choose for themselves forwarders with a cheaper shipping price. More importantly, businesses can shorten the time of preparing documents, saving time and increasing the efficiency of delivery as well as payment. As a result, enterprises can increase export, reducing the outflow of foreign exchange while creating favourable conditions for Vietnam’s logistics businesses.
In other words, when selling on CIF basis, exporters can earn higher foreign currency value than when selling on FOB basis. Also, if businesses are short of capital, they can use Letter of Credit (L/C) to borrow a higher amount. Selling on CIF basis allows enterprises to be more proactive in delivery, they don’t have to depend on the vessel (or container) chosen by importer. In some cases of selling on FOB basis, that dependence has led to late shipments, damaged goods at the port or in the warehouse, especially agricultural products. Selling on CIF basis also allows exporters to contact and buy goods insurance of domestic companies. This will definitely help boost the growth of the national insurance sector and create more jobs for the community, instead of letting the insurance and freight charges flow to foreign companies.
Meanwhile, when importing by FOB, businesses have the advantage of paying less deposit for opening L/C. Additionally, different from buy CIF when foreign customers often demand money only 3 days after delivery, by buy FOB, Vietnam’s enterprises pay freight only when goods reach the port of destination. This way, import enterprises can avoid facing accrued capital, or paying interest on bank loans for freight, reducing import costs.
In recent years, Daco Logistics Company has been promoting the rule of “sell CIF, buy FOB”, contributing significantly to the reform and changing trade habits of Vietnam’s businesses. Sharing some thoughts on the company’s activities, Mr Tran Huy Hien, Chairman and General Director of Daco Logistics, happily said: "To gain profit is considered the foremost priority of doing business, but in the case of Daco Logistics, our number one goal is not profit but what we can contribute to the community and society through our business activities, changing trade habits in particular. Daco Logistics has been making efforts every day to convince our customers to reverse their buying habits of ‘buy CIF, sell FOB’ into ‘buy FOB, sell CIF’. The outcome has been quite encouraging, seeing that the number of customers who change their trade practices is going up day by day."
Regarding the development strategy of Daco Logistics the years ahead, Mr Hien emphasized that to maintain and improve the current position, besides a sound management strategy, the company has also planned a direction for long-term development. With the right development strategy and effective investment directions, Daco Logistics firmly believes it will be even stronger in the future to continue to provide the market a wide variety of logistics services with high quality. Supported by a solid foundation of good competitiveness, skilled workforce and a credible brand, the Management Board as well as the staff of Daco Logistics will continue doing their best to boost the company’s strength in the future, aiming to make Daco Logistics a leading company in high-quality logistics services of 3PL, 4PL, etc.
An An
Vietnamese
