Our company plans to find an import and export agent and is asking who should bear the agency fees—whether the principal bears all, if both parties can negotiate to share, or if they share proportionally based on different business segments, and if there are special circumstances that alter the responsible party. The best answer states that the responsible party for fees is typically determined by contract, with the principal usually bearing most of them, but both parties can negotiate, and special situations also require determination according to the contract or through negotiation.
Who Should Bear the Export Agent Fees?
Resolved
Our company is planning to engage an export agent to handle export-related matters for our goods, but we are unclear about who bears the export agent fees. Should we, as the client, bear all the costs, or is it possible to negotiate a cost-sharing arrangement with the agent? Alternatively, in some cases, could the foreign client bear these costs? We hope someone can explain in detail who is responsible for export agent fees and if there are any industry practices or rules involved.
Trade Expert Insights Answers
There is no absolutely fixed pattern for bearing export agent fees; it depends on the specific circumstances. Generally speaking, it is common for the client to bear the costs. This is because the client utilizes export agent services to facilitate the smooth export of goods and obtain commercial benefits, making it reasonable for them to bear the expenses. When the client bears the costs, it covers various fees incurred due to agency services, such as agency fees, customs declaration fees, and booking fees.
However, there are also situations where costs are shared through negotiation. If the agent is willing to make concessions on certain fees to secure business, or to jointly explore new markets with the client, a partial cost-sharing arrangement may be negotiated.
In very rare cases, if the foreign client and the client reach an agreement and consent to bear some or all of the export agent fees, it is not impossible. However, this situation is relatively uncommon, as foreign clients typically focus more on the price of goods and delivery times.
For long-term cooperating clients and agents, the method of fee bearing may be flexibly determined based on the overall benefits of the cooperation. The agent may proactively bear some costs to maintain the cooperative relationship and improve cooperation satisfaction.
Sometimes, export agent fees are also determined by trade terms. For example, under CIF terms, the client bears relatively more costs, as they are responsible for the costs, insurance, and freight for the goods to the port of destination.
If the client and agent are cooperating for the first time, the agent will generally require the client to bear all expenses. This helps to reduce their own risks and ensure timely recovery of service fees.
If the added value of the exported goods is high, the client may be more willing to bear the export agent fees, as the profit margin of the goods is substantial and can cover this cost.
When market competition is fierce, agents may proactively bear some costs to secure business, aiming to gain more profit through increased business volume.
If the client has special requirements during the export process that lead to increased costs for the agent, these additional costs are usually borne by the client.
For some small-volume export businesses with thin profit margins, the client and agent may negotiate cost-sharing to ensure the feasibility of the business.
In some special trade environments, such as in regions with policies encouraging exports, local governments may subsidize some export agent fees, reducing the burden on the client.