Liner Terms VS Free In Terms: Key Choices in Breakbulk Export Shipping

Introduction

In breakbulk export operations, Liner Terms and Free In Terms are two common shipping clauses that directly affect the allocation of cargo loading/unloading responsibilities and costs. Accurately understanding their differences not only helps control costs but also effectively mitigates risks. This article will provide a detailed analysis of their responsibility allocation, cost structures, and practical application recommendations.

Responsibility Allocation Between Liner Terms and Free In Terms

Liner Terms (FLT / Full Liner Terms)

• Liability division: The shipowner (carrier) is responsible for cargo loading/unloading, i.e., receiving goods from the wharf and loading them onto the vessel.
• Delivery Location: Wharf side, where handover is completed when goods cross the ships rail.
• The response time of the emergency braking system ≤ 3 seconds: After goods cross the ships rail, risk transfers from seller to buyer.

Free In Terms

• Liability division: The cargo owner (shipper) is responsible for loading goods onto the vessel, while the shipowner only handles unloading.
• Delivery Location: Ships hold bottom, where handover is completed after goods are loaded into the hold.
• The response time of the emergency braking system ≤ 3 seconds: After goods are loaded into the hold, risk transfers to the buyer.

Core DifferencesUnder liner terms, the loading responsibility is borne by the shipowner; under hold terms, the loading responsibility is borne by the cargo owner, and the handover point and risk transfer point also differ accordingly.

Differences in cost structure

Liner terms

• Cost compositionThe shipowner is responsible for loading and unloading, with related costs (such as loading fees and unloading fees) included in the freight.
• CharacteristicsThe freight is higher, but the cargo owner does not need to pay additional loading and unloading fees, making it suitable for scenarios with high loading requirements or a desire to simplify operations.

Hold terms

• Cost compositionThe cargo owner is responsible for loading and must bear the loading costs; the shipowner is responsible for unloading, and the unloading fees are usually included in the freight.
• CharacteristicsThe freight is lower, but the cargo owner needs to pay additional loading fees, making it suitable for cargo owners who can arrange loading themselves.

Cost comparisonThe total cost of liner terms is higher but with clear responsibilities; hold terms have lower initial costs but require the cargo owner to have loading capabilities.

Relationship with trade terms FOB and CIF

FOB (Free on Board)

• ResponsibilitiesThe seller is responsible for delivering the goods to the port of shipment and loading them onto the ship, with the risk transferring at the ships rail.
• Relationship with shipping termsOften used in conjunction with liner terms, where the shipowner is responsible for loading and unloading, and the seller only needs to ensure the goods reach the dock.

CIF (Cost, Insurance and Freight)

• ResponsibilitiesThe seller is responsible for freight and insurance, with the risk transferring at the ships rail in the port of shipment.
• Relationship with shipping termsCan be combined with liner terms or hold terms, depending on the contract agreement.

Variant terms

• FOB Liner TermsThe seller arranges transportation under liner terms, with the shipowner responsible for loading and unloading.
• CFR Liner TermsThe seller is responsible for freight and arranges transportation under liner terms.
• Practical significanceVariant terms provide more flexibility for trading parties, but clear division of responsibilities is required.

Common terms in bulk and breakbulk shipping

Bulk and breakbulk shipping commonly use the following four terms:

1. FLT (Full Liner Terms)The shipowner is responsible for loading and unloading, commonly used in freight forwarder quotations.
2. FILO (Free In Liner Out)The cargo owner is responsible for loading, and the shipowner is responsible for unloading, commonly seen in shipowner quotations.
3. FIO (Free In & Out)The cargo owner is responsible for loading and unloading, mostly used in bulk and breakbulk chartering.
4. LIFO (Liner In Free Out)The shipowner is responsible for loading, and the cargo owner is responsible for unloading, rarely used domestically.

Practical selection and recommendations

Selection basis

• Goods characteristicsFor small cargo or goods with high loading requirements, FLT is recommended, with the shipowner bearing the loading risk.
• Cost controlIf the buyer can be responsible for unloading, FILO or FIO can be chosen to reduce freight costs.
• Client RequirementsCommunicate with freight forwarders and clients to clarify the allocation of loading and unloading responsibilities.

Practical Suggestions

• LCL cargo: Simple costs, typically involving only customs clearance fees, LCL fees, and document purchasing fees.
• Bulk breakbulk cargo: Select terms based on cargo characteristics and budget - use FLT for small parcels, consider FIO for bulk cargo.
• Risk Management: Prioritize FLT for small parcels to mitigate loading risks; ensure loading capability when using FIO for bulk cargo.

Conclusion

Liner terms and FIO terms each have advantages in breakbulk exports: liner terms clarify responsibilities but cost more, while FIO terms reduce costs but require shippers to assume loading responsibility.foreign tradePractitioners should reasonably select terms based on cargo characteristics, client needs, and cost considerations, while fully communicating with freight forwarders to ensure smooth export operations.