Shipping & Finance

For a manufacturer seeking to outsource abroad, there can be a learning curve. In particular, the areas of shipping and financing are generally unique and new that clients learn about.

When sourcing overseas many clients try to consolidate the volume of production done overseas. There are substantial cost savings that can result from consolidated shipping. Shipping is usually done in 20 and 40 foot containers by sea. Shipping by freight is also available for those manufacturers who require more time sensitive products, but of course the additional cost must be factored in accordingly.

A few typical terms of sale as they relate to Riverstone are as follows:

FOB (Free On Board) (...Named Port of Shipment): An International Term of Sale that means the seller fulfills his or her obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks to loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export.

CFR (Cost and Freight) (...Named Port of Destination): A Term of Sale where the seller pays the costs and freight necessary to bring the goods to the named port of destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. The CFR term requires the seller to clear the goods for export.

CIF (Cost, Insurance and Freight) (...Named Place of Destination): A Term of Sale where the seller has the same obligations as under the CFR but also has to procure marine insurance against the buyer's risk of loss or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The CIF term requires the seller to clear the goods for export.

FOB is the most common term of sale for Riverstone Manufacuring. Once delivered to the port, our clients have title to (i.e. own) the goods. We understand that clients beginning to work with us may be interested in first seeking a third party testing service like SGS Group (http://www.sgshk.com/) prior to releasing the goods into their custody. Riverstone guarantees that items, at a minimum, meet the specified standards irrespective of third party testing services.

Under FOB, the client is technically required to arrange for shipping. Riverstone is able to help in recommending a freight brokerage.

In terms of financing, core to Riverstone's strategy is to charge clients only the services that they need including financing. Initially, for both the client's and our protection, new clients are given the choice of either providing a downpayment of 30% of their order with the remaining 70% payable (usually wired) upon delivery (at the port), or through a 100% letter of credit up front.

A letter of credit is where a client's bank guarantees payment to the exporter if all documents are presented in exact conformance to the terms of the letter of credit. The amount that a client's bank will require a client to put up is therefore depedent on their relationship with the bank. Cash is therefore released once Riverstone has completed it's obligations, but Riverstone is not in danger of not being paid because the bank is guaranteeing the payment.