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CNF, CIF, FOB, DDP & EXW Explained!

August 29, 2019 by Andrew Minalto - 362 Comments
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Welcome back!

If you’re an eBay or Amazon seller who has just recently started importing from China, you know there are LOTS of things to learn! You need to know everything from how to filter out scams on sites like Alibaba to the best ways to order product samples, as well as all kinds of specific, previously unknown business terms and abbreviations.

And it’s not like you can just ignore these new terms and abbreviations. Having your price or shipping terms wrong can turn your first order into a massive disaster! You can easily incur unexpected charges that you never accounted for, which can totally ruin your projected margins and chances of being profitable on eBay or Amazon.

CNF, CIF, DDP, FOB, Ex-Works—what do they all mean? And, most importantly, which of these shipping methods is the most cost-effective? Which one is the best for your situation?

These are all great questions. In this post, I will try to explain the importing process from China as simply as possible and to best of my knowledge. Before we get into the specifics of what each of these terms mean, you have to understand that there is no ONE best pricing or shipping option to use. It all depends on what you’re ordering, how big your order is, what shipping method you plan to use, etc. So, it’s not all white and black.

With that being said, some shipping terms are better than others and, in most cases, eBay and Amazon sellers will greatly benefit from selecting the most appropriate shipping terms for their situation.

Ok, without further ado, let’s cover five of the most popular shipping and pricing terms used when dealing with suppliers from China!

FOB – Free on Board
(or Freight on Board)

The most popular term used on sites like Alibaba.com is FOB. This is basically the DEFAULT pricing used when dealing with suppliers in China.

FOB pricing means that it covers:

  • Product cost
  • Local exporting fees/customs
  • Delivery of your order to the nearest port

This price won’t cover shipping from China to the UK (or any other country), insurance of the shipment, local customs fees (VAT & import duty), customs clearance fees, local port fees or delivery to your address.

Often, you will see that the term FOB is followed by another word. For example, FOB Ningbo. Ningbo is a city in China, so FOB Ningbo means that this is the port that the supplier will ship your order to, which is covered by the FOB price.

There are many ports in China, so depending on the supplier’s location, they usually use the closest port by default. However, you can ask them to send your goods to a different port—in which case, the FOB price will most likely increase.

The reason why FOB pricing is the most commonly used in China is because, traditionally, most goods are shipped by boat. Nowadays, however, with the rise of marketplaces like eBay and Amazon—and with everyday people importing smaller orders and using couriers and air freight more often—that situation has changed.

Should you use FOB pricing with your supplier? It really depends on your order size and weight. If you will use sea freight, then yes, FOB is the way to go. If you will use air freight then, again, FOB is the way to go (only this time it will be to an airport instead). If, however, your order is small and you will use a courier delivery service, you should not use FOB. In this case, use EXW instead.

EXW (Ex-Works)

Sometimes referred to as the “ex-factory” price, EXW basically means the cost of the product and nothing else! No shipping costs or export fees in China are included in this price, never mind the local port and customs fees or delivery to your door.

Still, there’s a place for these pricing terms when you use a courier shipping method for your order. By courier shipping, I mean the fast air courier shipping method offered by companies like DHL, UPS, TNT and others. Delivery from China via courier usually just takes 4-6 business days. The downside is that courier shipments are very expensive and are only suitable for very small items (and sample orders).

If you have decided that courier shipping is the way to go, you should ask your supplier for the EXW price AND ask them to get a courier shipping quote for you.

Yes, that’s right, ask the supplier to organise your courier shipping. If you do it from the UK (or US), you will pay much more. Local Chinese suppliers will get much better rates, so there’s no point in doing this on your own.

Hopefully, your supplier will be honest, though, as sometimes they try to overcharge you on the shipping fees. The best way to avoid this is to get shipping quotes from three different suppliers, even if you don’t plan on ordering from the other two. This way, you can compare all three and see if your real supplier is trying to overcharge you. If they are, you can simply ask for an explanation as you have proof on hand that two other suppliers can ship the order for less.

Another advantage of using EXW + courier shipping is that you won’t have to deal with the local customs clearance procedure. Courier companies will do that for you and invoice you for VAT, import duty and a small customs clearance fee. Then, they’ll deliver the goods straight to your door.

So, EXW should only be used together with a courier shipping method. Don’t use it for sea freight shipments, even if you’re planning to use your own shipping agent. Instead, go for FOB because it will be cheaper than paying extra fees to your shipping agent to cover local delivery/export fees in China.

CIF & CNF

CIF — Cost, Insurance and Freight.

For CIF, the price also includes sea freight charges and insurance to deliver the goods to YOUR nearest port. But remember, it’s only to the port. From that point onwards, it’s up to you to take responsibility for the shipment.

CNF — Cost and Freight (or Cost, No Insurance, Freight)

CNF is similar to CIF, except insurance is not included.

If your supplier quoted you a CNF Felixstowe price, it means that the price includes shipping of the goods via sea freight to the Felixstowe port. When the goods arrive there, you’ll have to organise customs clearance and delivery to your home/office/warehouse.

While the CNF price can look very attractive, keep in mind that there will be other costs involved when your goods arrive in London, such as:

  • Customs clearance fee
  • Value added tax (VAT)
  • Import duty
  • Port security charge
  • Fuel surcharge
  • Docking charge
  • Warehouse storage fee
  • Etc.

So, the CNF price is really just the tip of the iceberg and is not the true, FINAL price that you’ll pay for the products you’re importing.

Also, since you’re new to importing, it will take more time than usual and be a lot of hassle for you to organise everything at the London port.

A much better alternative is to use a freight forwarding agent for your shipments from China. These companies take care of EVERYTHING mentioned above and will deliver the goods to your door without you having to mess around with the customs clearance procedure.

You will usually receive an invoice from them once your goods have arrived that clearly lists all the taxes, customs fees and port fees.

I highly recommend you use such a company, at least for your first few importing deals. These freight forwarding companies are very affordable and can actually work out cheaper than if you try to do it all on your own.

My recommendation for UK customers is Woodland Group, which is a freight forwarder with great customer service, weekly shipments from China and very competitive prices. Get in touch with them to find out exactly how much your order will cost delivered to your door after all the fees and taxes have been paid.

When contacting a freight forwarding company, make sure you ask for a door-to-door price. This is very important. Otherwise, you can end up with a host of additional charges when your goods arrive in the UK.

The FOB price in combination with the use of a freight forwarder is the most cost-effective way to do sea freight shipments from China. And you will know EXACTLY how much it will all cost, even before you place your order with the supplier.

DDP (Delivered Duty Paid)

This means that the price includes EVERYTHING:

  • Price of goods
  • Local export costs in China
  • Shipping to the UK (or any other country)
  • Customs clearance in the UK, VAT, import duty and other charges

Sounds good, right? Yes, this sounds like the PERFECT way to do business in China. And often you will discover that this DDP price is just slightly higher than the FOB price. Perfect, right?

As adults, we all know that if it looks too good to be true, it is too good to be true.

How can the DDP price be just slightly higher than the FOB price when you know that the import duty and VAT adds at least 25% extra in fees in the UK? And then add the actual shipping cost, customs clearance, etc. It simply CAN’T be true!

That’s because it’s not true. Some Chinese suppliers are taking advantage of various loopholes in the transit system, undervaluing the goods, hiding smaller shipments in bigger pallets, etc. In short, they AVOID paying proper import taxes and VAT and basically smuggle your goods into Europe without paying all the necessary taxes.

I have written a separate post about DDP scams in China here:

Without spending too much time on it here, I strongly recommend you don’t agree on DDP terms, period. If you do, you are almost certainly taking part in a tax evasion scheme, which can hurt you very badly in the long term.

Conclusion

Ok, I really hope this clarifies the various terms you might see in relation to pricing and shipping methods when dealing with importing from China.

To sum it up: If you use sea freight as your shipping method, ALWAYS ask for an FOB price! This covers the cost of the product and local charges in China to the nearest port.

Then, you can ask your supplier for the order’s dimensions (weight and size) and contact a freight forwarder (such as Woodland Group) for a door-to-door quote. Lastly, don’t forget about insurance! It usually costs just £20-£30 and it will protect your shipment against loss and damage.

On the other hand, if your order is very small and you plan to use a courier for delivery, work with EXW prices. You can ask your supplier to organise courier delivery and add that extra cost to the invoice.

Forget about CIF, CNF and DDP altogether! They will either be more expensive in the end (CIF and CNF) OR you will be participating in tax fraud (DDP).

Just so you know, DDP terms as such are not illegal. In fact, they’re totally legal and widely used in the Western world. Even companies like Amazon use DDP for international orders. For example, when you order goods from Amazon.com, you prepay the taxes to have it shipped into the EU.

The problem is that Chinese suppliers are not using this process correctly or legally. Instead, they’re playing the system and telling you that everything is ok. Just don’t do it.

That’s it for today. If you have any further questions, make sure to leave them in the comments section below. I personally reply to all comments within 24 hours, Mon-Fri.


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362 Comments
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  1. Hi Andrew,

    Nice blog!
    I am based in UAE, and am in a position to place my first order within the next few weeks. I am importing customized face mask from Alibaba, Qty: 6000 pcs usd0.55/pcs Exw.
    I would appreciate your advice me on which terms should i use.

    thank you

    1. Andrew Minalto

      Hi Ashif,

      Thanks for your comment.

      You should probably go with the EXW price + the courier delivery directly from the supplier.

      6000 masks is not a huge order, so sea freight won’t be viable option.

      Thanks,
      Andrew

  2. Hi Andrew.
    Thanks for all the info its a massive help! But I cant seem to find the answer to a query I have.
    Im looking to order just a sample squat machine rack from Alibaba and have been quoted $420 for the sample and $480 DDP shipping price $900 total.
    This is for a door to door delivery to my address in the UK from China.

    Ive asked the supplier if an invoice can be given to show full tax/import duty has been paid on the value and their response was that they can provide invoices but you don’t need to pay ‘custom duty’ for the DDP quotation.

    So my question is what import tax/ Duty do you pay on just a single sample item from overseas commerce coming into the uk and is the supplier correct in saying no custom Duty/ custom tax is owed with DDP on this single item in question? And should I consider ask for breakdown of the DDP quotation or should i just request a FOB quote and use freight forwarder instead?

    Thank you in advance!

    Georgie T

    1. Andrew Minalto

      Hi George,

      Is this purchase for personal use or resale/business?

      Andrew

      1. georgie T

        Hi Andrew

        This sample will just be for personal use?

        Thanks

        Georgie T

      2. Andrew Minalto

        If it’s for personal use, why do you worry that much about the invoice or customs clearance? 🙂

        if they can get the item to you this way, you should probably be happy about it.

        Business purchases are a different story though, I talk more about it in this post:

        https://andrewminalto.com/delivered-duty-paid-ddp-scam/

        Thanks,
        Andrew

      3. georgie T

        Hi Andrew
        No I am more then happy they can deliver this way for that price as the item isn’t light.
        My question really is around Import duties/fees/VAT/Customs clearance on a personal purchase such as this?
        Does the same Import duties/fees/VAT/Customs clearance apply if i just want a single item shipped for personal use?

      4. Andrew Minalto

        Yes, the same tax principles apply.

        But as they will smuggle these items into the EU, they most likely won’t pay proper taxes on the shipment.You can read more about this scheme here:

        https://andrewminalto.com/delivered-duty-paid-ddp-scam/

        Thanks,
        Andrew

  3. Hi Andrew.
    I recently ordered 240 pieces of cloth valuing at around $250 USD and the shipment was DAP.
    I have the shipment coming to my home address in the US from China. Does this mean I have to arrange anything or will it be straightforward and shipped directly to my home? Will I incur any additional fees on the bulk purchase?

    Thank you

    1. Andrew Minalto

      Hi Christine,

      Thanks for your comment.

      Unfortunately, I’m not familiar with the importing procedure and tax situation in the US, but either way, courier company will contact you if they will need any further information from you or if there are any taxes to be paid.

      Tanks,
      Andrew

  4. Hi Andrew
    I trying to buy matllic yarn 6000kg 1 container 20ft.wich way is best forme to deliver it to my doorstep with all custom duty paid Insurance paid and all feright charges all tax paid.pleas reply in detail how i can deal with this ist my frist time to buy from china on app made in china

    1. Andrew Minalto

      Hi Qasim,

      You will want to get a FOB price from your supplier AND work with a freight forwarding company, which will take care of the shipping process, customs clearance and delivering goods to your address.

      Thanks,
      Andrew

  5. H
    I just want to ask you how about if I order different products from different sellers from China and quantity is equal to one 20ft container so how do I get all product at port because there’s different sellers in China and different locations.

    Thank you

    1. Andrew Minalto

      Hi Rizz,

      Your freight forwarder should be able to consolidate such shipments into one. Just ask them about this.

      Andrew

  6. I am in the middle of a trade assurance order, invoice received for payment. Gold supplier, verified. Already ordered samples and they were good. Not branded products. Invoice says EXW:You need to pick up the goods from the nominated factory place, and arrange shipment by yourself, also afford all the fees and risks that may occur during delivery. But Says shipped by Air Freight $690.00 for shipping. Supplier says customs and duty included. So far all things look good but shipping confusing me. Also, when invoiced he added items to my invoice but the cost of goods is the same end price. I asked him about it and he says he wants to get data on other products. My item and quantity is on the invoice also though. Thoughts?

    1. Andrew Minalto

      Hi June,

      VAT and import duty can’t be included in that price. You will pay these separately when goods arrive in the UK.

      Not sure what you mean about those other products added to the invoice? You don’t want any confusing information there as that could lead to problems with Customs. Have 100% accurate information on products, quantities, prices and everything else.

      Thanks,
      Andrew

  7. You are so amazing

    1. Andrew Minalto

      Thanks! 🙂

  8. Good evening Andrew,

    I hope you are well.

    Thank you for the informative post.

    I was wondering what is classed as a small shipment is this based on both weight and quantity? I have not shipped anything before and I am looking for the cheapest option including all of the fees. I am looking to order and ship 200-500 units of a 340g product from China to the UK. Which shipping method would you recommend based on this?

    Thank you!

    Kind regards,
    Shannon

    1. Andrew Minalto

      Hi Shannon,

      Thanks for your comment.

      How big (in size) will be it?

      And 200 or 500 units is a BIG difference…

      Thanks,
      Andrew

      1. Hello Andrew,

        Thank you for your response.

        The item is 20cm height, 10.8cm width and 340g weight. At the moment I am trying to get the best possible deal without spending too much. Lets say 200 units, would it be ideal for the shipping method to be by sea?

        Many thanks for your help!

        Kind regards,
        Shannon

      2. Andrew Minalto

        Hi Shannon,

        Thanks for your comment.

        No, at that quantity sea shipping will not be cost-effective. And same applies for courier shipping – it will be very expensive.

        You should increase the order size to 500 units and ship it via sea, to kee shipping costs per unit down.

        Thanks,
        Andrew

      3. Hi Andrew,

        Thank you for your reply and advice!

        Many thanks,
        Shannon

      4. Andrew Minalto

        You’re welcome! 🙂

  9. Hi Andrew,

    I have ordered elastic from China via AliBaba. It cost £205 and is being shipped by FedEx. It says on the contract “EXW : You need to pick up the goods from the nominated factory place, and arrange shipment by yourself, also afford all the fees and risks that may occur during delivery.” This is under trade terms.

    I tracked my shipment and it is in the UK so I’m not sure if I will owe anything extra yet. The whole shipment weighs 13.3 kg. In future what would be a better option? Especially if the weight will probably double or triple? I’m looking for something which would let me know the extra fees upfront and not have extra fees pop up suddenly.

    Also could you explain what the freight forwarder company would do? Does the Chinese supplier only ship to the port and then the FF company takes over and delivers to your door?

    Thanks
    Yasmin

    1. Andrew Minalto

      Hi Yasmin,

      Thanks for your comment.

      For such a small shipment you don’t need a freight forwarder. It will be more expensive and totally unnecessary.

      Courier/express (Fedex in your case), is the right option.

      When goods arrive in the UK, you will have to pay VAT, import duty and customs clearance fee. These numbers you can calculate in advance too. VAT for most goods is 20%, import duty is usually around 3-5% (can find the exact rate here: https://www.gov.uk/trade-tariff) and FedEx clearance fee should be around £20 to £30 for such a small shipment.

      Thanks,
      Andrew

      1. Hi Andrew,

        The order got cleared and there wasn’t a payment for me which I found strange. It all went well and was super straightforward.

        My other supplier wants to use UPS but has written DAP on the order form and it says “When the goods arrive at the destination place, you need to unload the goods and do the import customs clearance, and pay the import duty as well as any other destination port fees.”. I am guessing I should request it to change to EXW?

        Thanks Andrew.

      2. Andrew Minalto

        Hi Yasmin,

        In the case of express/courier delivery, it basically means the same thing.

        So you should receive your order in a similar manner.

        Andrew

  10. thank you Andrew
    I have a sample order of 10 vape cigarettes from china that would fit in a 12″x24″ cardboard box from a gold supplier that I want shipped to my business with zero drama within 15 days. This would be my very first attempt at Alibaba.
    The agent has recommended
    Shipping Method : Air Freight at $42.00
    Trade Terms : CIP
    Should I use PayPal ?

    1. Andrew Minalto

      Hi Ronnie,

      For such small/lightweight orders, the only viable and cost-effective shipping method is courier/express delivery.

      Yes, of course, you can use PayPal to pay for the order.

      Thanks,
      Andrew

  11. Hi Andrew ,

    I was looking some solid way to import Bedding Items from China to UK. But Couldn’t find proper answer regarding shipping but after reading your posts and I think you are master of it 🙂

    I have few questions if you could help:

    Im buying cotton pillow cases from one supplier in China FOB to UK and from other supplier product packaging boxes of pillow cases (China FOB to UK).

    Now, Im looking freight forwarding company, if they can pick up items from 2 different suppliers and hand over to my freight forwarding company, what happens if supplier 1 can’t deliver at right time so do you think freight forward company can wait for it.

    I wish to use EXW but there is no trade assurance, as good left supplier warehouse so I have to use the FOB and I would he happy if freight company pays all the VAT + Duty + Service Fee and delivers goods at my door and I pay them one single fixed amount. invoice.

    Pillowcase total weight will be under 60 KG and its going to 3 cartons. With your best knowledge and experience what do you suggest to use the air/sea service because size won’t be too big or should I just use express DHL/ TNT Service who pick up as EXW and deliver to my at door or fright forwarding company via FOB

    This is my first time, I just dont want to make mistake and lose money.

    I really appreciate your help!

    Many Thanks,

    Olga

    1. Andrew Minalto

      Hi Olga,

      Thanks for your comment.

      Most freight forwarders will have some sort of warehouse facilities in China, so they can combine the shipments for you and wait a few days. That shouldn’t be a problem. Sending 60kg/3 boxes of pillowcases via air will be very expensive, so you should do whatever you can to avoid this.

      Just contact freight forwarding companies, get quotes and see what they can do to help with your situation.

      Thanks,
      Andrew

  12. Michael Yorke

    Hi Andrew. Great website btw.

    I am researching importing and getting all the info I need before placing my first order and your website has been an invaluable tool. I have negotiated with one factory who manufacture lighting. I have an FOB price for an initial order of 5 units. Each unit is boxed individually and per box measures 55x55x29cm and 4.5KGs. The total cost of this order is around $250 USD.

    My next stage of research is finding a freight forwarder who can get these from Port to Door and take care of all the paperwork, duties, etc.

    I got an automated comparison Sea quotes from freightOS, which were upwards of $1250 USD. So should I be considering Air instead? Is my shipment too small (in CM squared) or too light (just 22KG) for Sea?

    Also, I contacted Woodland Group via their ‘contact us’ form, and basically asked how best to get this done but they haven’t responded yet. Hopefully a glitch in their website, rather than ignoring the small order.

    Thanks in advance.

    1. Andrew Minalto

      Hi Michael,

      Thanks for your comment.

      Yes, that order is way too small for using sea freight. Way too small. With sea freight, ideally, you want to send at least 2 cubic meters (one full pallet), to make it cost-effective. For your order, a courier is the only reasonable shipping method to use. It will be super expensive, but still – cheaper than sea or air.

      Thanks,
      Andrew

      1. Michael Yorke

        Thanks Andrew,

        I just got a quick online quote from FedEx for collecting these 5 boxes from the factory address and delivering at my home address and it was $1880 USD! Yikes.

        If I look on AliExpress for the same item, I can order 1pc for $125 delivered from a reseller.

        I know this is all part of the learning curve, but why is shipping 5 boxes so expensive? Is it because they are relatively large, but light in weight?

        Is the only way to make this cost effective simply to order more units? enough for a few pallets? Advice is greatly appreciated.

      2. Andrew Minalto

        Hi Michael,

        The price is so high because you looked it up on your own. Don’t do it.

        Contact your supplier and ask them to get a courier quote for you. It will be much cheaper.

        But yes, in general, the order is simply too small. For an item like this, you would want to order at least one pallet worth of goods and ship it via sea, to get a reasonable shipping cost per unit.

        Thanks,
        Andrew

  13. Hey I wonder if you can help me I recently ordered some inflatable castles from China and I have just had the invoices come through I believe the company sent the shipment cnf and no I just been hot with lots of different charges from handling fees to CAF charges LCL document charges the lot is this right and can they charge me for import dutys as well as tax and custom clearance I just think the total of what they invoiced me is more then what the castle is worth

    1. Andrew Minalto

      Hi Don,

      Yes, I’m afraid that’s how it works…

      You will have to pay all those charges and next time be smarter about this and use a freight forwarder who can give you “door to door” quote, which will include all these extra charges.

      Thanks,
      Andrew

  14. Hi Andrew

    I’m in the process of placing my first order with Alibaba. Supplier has said they will ship it to Felixstowe. Previously they had said FOB NINGBO. Is it cheaper and less complicated now that they are shipping it to Felixstowe or is it the opposite? Please let me know. Thanks in advance.

    Amalie

    1. Andrew Minalto

      Hi Amalie,

      DON’T rely on your supplier organising shipping! You will face a ton of extra costs in the UK when goods arrive.

      You should use a freight forwarding company who will take care of shipping, customs clearance and everything else and present you with a FIXED price/cost for the service. Here’s the one I recommend to use:

      https://www.woodlandgroup.com

      Thanks,
      Andrew

  15. Hi Andrew,

    Thank you so much for all the articles you post. They are so helpful, and I appreciate all the time you put into answering everyone’s questions.

    I have a few questions:

    1. I am importing fashion accessories like jewelry and very small boxes for them (about 3″ square) (ordering about 1000 units of jewelry and 1000 units of small boxes). I’m being quoted EXW prices. Is this normal for an order of this nature because they are lighter items? Or should I be asking for FOB terms?

    2. I’m also wondering how EXW works with Alibaba’s Trade Assurance. If the seller is only responsible for leaving the product at their own front door, essentially, is our Trade Assurance payment released to them once they’ve finished manufacturing the goods and left them for pickup at their factory? If so, what recourse do we as buyers have if the goods turn out to be defective or non-compliant?

    3. This is not related to the topic of this particular article, but how do we deal with products that are not satisfactory in quality? I’ve ordered samples and am happy with them, but what if we receive a bad batch during the “real” bulk order? On that note, are there certain terms you recommend we get in writing during the quotation process to protect ourselves in case we run into quality issues?

    Thank you so much!

    1. Andrew Minalto

      Hi Jane,

      1) You want to ask for FOB prices OR if the order is small and can be sent via courier, ask the supplier to give you a price with courier shipping costs.

      2) I don’t think that’s an option with Trade Assurance as with TA orders shipping is part of it, so EXW order won’t work there.

      3) There’s always a risk of defective items, it’s part of the business. No contract will protect you – you just have to take the risk. You also want to do a pre-shipment inspection before goods are shipped out:

      https://andrewminalto.com/pre-shipment-inspection/

      Thanks,
      Andrew

      1. Thank you for your reply, Andrew. So when do people use EXW? I thought FOB was shipment by boat and EXW was by air? One supplier told me that the order would have to meet a certain weight threshold to be shipped by boat.

        And so when do freight forwarders come into play? For some reason, I thought you used them only for EXW orders and not FOB. Sorry, I guess I am just very confused and am missing something.

      2. Andrew Minalto

        Hi Jane,

        EXW is used in cases you want to arrange shipment on your own, picking up goods at factory’s address, deal with all the EXPORT formalities in China etc. It is also often used with courier deliveries, yes, when they quote you EXW price and courier shipping price separately.

        You can use a freight forwarder in both cases – EXW and FOB. In the first scenario, a freight forwarder will deal with picking up goods from supplier, organising export procedure etc. This is usually more expensive than letting supplier do it and buy on a FOB basis. That’s why usually I use and recommend to use FOB + freight forwarder for sea/boat shipments.

        Thanks,
        Andrew

  16. Hi Andrew

    Your blog, is very helpful, with information on the CNF, CIF, & FOB explained!

    I need some hand holding with the names/contact details of freight forwarding agents to send goods from Australia to India. Do you have a directory of such agents, that could help me with my new venture.

    Cheers,
    Josh

    1. Andrew Minalto

      Hi Josh,

      You will want to look locally, on local Google website for such companies.

      Local freight forwarders will usually have the best connections, prices etc.

      Andrew

  17. Hi Andrew, thanks for the great work. I run a law firm and I intend to import some office furniture from China to Nigeria. I have requested the merchant on Alibaba for an FOB price. So, my question is, do you advise I use a freight forwarding company in China to obtain this goods at Port Shanghai and ship same to my doorstep in Nigeria, or is it a Nigerian freight forwarding company that ought to undertake this task? Thank you.

    1. Andrew Minalto

      Yes, you will want to use a freight forwarding company who can handle the shipment, customs clearance and delivery to your door.

      It doesn’t really matter where the freight forwarding company is located, as long as it’s reliable and reputable.

      Thanks,
      Andrew

  18. Hi Andrew
    thank you for the information
    I wanted to ask which is best option for me as this is my first time doing international trade and I’m super confused.
    I’m buying 3D lamp bases from alibaba and they’re giving me USD 1.2 Per piece FOB.
    my order is going to be total of 2 Boxes (30cmX30cmX30cm) and something around 40-50kg.
    I’m ordering from shenzhen port to Dubai Jabal Ali port.
    I guess my question is, is FOB best option for me? and approximately how much is going to cost me for shipping. (not including clearance)
    also is it better for shipment to be by ship or plane.
    tnx and sorry for bad english

    1. Andrew Minalto

      Hi Nima,

      A package that size should go via courier shipping method. Ask your supplier to organise shipping for you via courier and simply add shipping costs to your overall order/invoice.

      No need to involve air freight or sea freight for such a small shipment.

      Thanks,
      Andrew

  19. Hi Andrew,
    I am reading all your comments, however if you have already replied to a question such as mine, my apologies.
    Please could you explain the difference between door to door and FOB?
    Shipping from China to UK.
    Many Thanks for your wonderful advice so far!

    1. Andrew Minalto

      Hi MIke,

      There’s no official term for “door to door” – it is more related to the shipping process as a whole when say, freight forwarders offer you door to door service.

      But it means that your supplier, freight forwarder or shipping company WILL clear the goods through customs and deliver to your address in the UK.

      Thanks,
      Andrew

  20. Happy New Year Andrew!
    I’ve been reading your different; and almost all the comments here.
    I am importing a 40ft container from China going to Philippines., this is not my first time , previously had twice but only 20ft, I paid a lot of fees (customs and all other standard fees,) for us to import items we need a agent or broker if you don’t have a permit to import .
    Now, this new supplier is charging me a CNF, previous order from other supplier is CIF, I’m just thinking if I really need to have insurance. I trust the agent/broker in China which is connected here in Philippines and I been using that from my previous orders. the reason I ask this because I have a doubt that they’re charging me too much. Is it really required to apply for insurance? The CNF is new to me.
    Thank you for your time.
    Regards
    wes

    1. Andrew Minalto

      Hi Wes,

      Happy New Year!

      Yes, you should INSURE the shipment as things can and do go wrong..

      If you feel that supplier over-charges you for insurance part, get it somewhere else – usually, insurance for sea freight shipments is very cheap and it should NOT affect your final cost that much.

      Andrew

  21. Tom Carlson

    Good morning, Andrew. Your blog is the closest I’ve come to finding an answer to the following question. What is the difference between ExWorks and FOB Shipping Point when exporting? The hang-up seems to be the ‘shipping point’ designation portion of the FOB. They seem equal to me, with shipping responsibilities the burden of the buyer and legally the transfer of ownership and recording of a sale occur at the time it leaves the dock, but everything I’ve researched seems to focus only on comparing ExWorks vs. FOB without the shipping point designation.

    Is the ‘shipping point’ not recognized internationally? Or is there some nuance about the handling of the product on the dock? Any clarification you can share is appreciated.

    1. Andrew Minalto

      Hi Tom,

      Thanks for stopping by! 🙂

      To be honest, this is the first time I hear of such” Shipping Point” term being used. I have only heard EXW and FOB being used.

      I do think that FOB and FOB Shipping Point means the same thing, maybe some suppliers use that extended version to specify which port they deliver to.

      Thanks,
      Abdrew

      1. Tom Carlson

        Thanks for the quick reply. To be sure we’re on the same page, FOB shipping point is perhaps more commonly provided as FOB and then the actual production location, the point the transfer of ownership happens. I’ve always seen FOB have some sort of qualifying location, but that’s mostly been with domestic shipments.

        For international shipments, is it common to just have FOB stand alone as a shipping term?

      2. Andrew Minalto

        Yes, that’s the way it is presented in 99% of contracts/invoices I have seen – just term FOB along with the port name. For example: FOB Shenzhen

  22. Hi Andrew,

    Great post!
    I have a question regarding air courier shipping terms. I am exporting from China. The supplier will be sending the goods via air courier however they initially sent me a contract containing FOB terms.

    I requested for this to be amended to EXW. Instead, they have changed the contract to CIF. Can I proceed with CIF or would I encounter any issues with using these terms?

    Thanks in advance!
    Hannah

    1. Andrew Minalto

      Hi Hannah,

      It should be all good with CIF and courier shipping essentially means cost, insurance & freight.

      Andrew

  23. Ron Gibbons

    Hi Andrew,

    We are starting our trading agency and as part of the first deal, we are working with buyer and seller agents. In total there will be three parties involved, including us.

    We will be buying the items from the buyer’s agent from port in Russia and it has to be delivered in a port in Italy.

    As we are dealing with used goods, there is a risk of shipment getting rejected at the arrival port by the agent we are selling to.

    What should be the best payment and shipping terms for us with both buyer and seller agents? As we are completely new to this business, we would want to reduce our risk to minimum.

    Both the agents we are working with prefer CIF basis but to minimize our risk of payment default, we ideally would like FOB with whom we are selling to, would this be an ideal situation or what would you suggest?

    1. Andrew Minalto

      Hi Ron,

      Thanks for your comment.

      IF you want to minimise risks, FOB price of course is your best option – you receive your money before goods leave the port and what happens after, is all buyer’s responsibility.

      Thanks,
      Andrew

  24. Hi Andrew,

    You explained it beautifully
    Its looks quite easy now.

    Do you have any article about payment issues?
    How do we pay some exporters ask for 50% advance payments how do we know or assure our payment will be secured and we will get the goods ?

    Thanks
    Mansoor Saeed

    1. Andrew Minalto

      Hi Mansoor,

      I have loads of articles on this subject, please take a look at the archive page here:

      https://andrewminalto.com/start-amazon-business/

      Thanks,
      Andrew

  25. Hi, Andrew
    Today i have made a deal with supplier on Alibaba and that’s my first deal. She has agreed to deliver the product within 15 days through E-Express with full responsibility to my door step. She has made a contract in which she has clearly written all the details – arrival time, products detail, weight etc and has also written that her company will be responsible if the goods would not reach the destination – all these information has been written in the product detail section but on the shipment details she hasn’t written the estimated delivery time and from where it will be delivered. We have agreed on the payment term EXW and lastly, I have paid the payment through trade assurance. After paying the money, I got a message that money will be delivered to the supplier after 2 days. That moment i realized how big a mistake i have made by agreeing on EXW payment term. Now i am a bit worried if they’ll receive the money before, will they delivered the goods because then there will be no surety as the money has already been transferred from Ali baba’s account to the supplier’s account and kindly tell me if there are any other terms and conditions of payment that I should have had agreed on before.
    I’ll wait for your reply.

    Regards,
    Nabeel

    1. Andrew Minalto

      Hi Nabeel,

      Thanks for your comment.

      How big is the order in terms of monetary value?

      Andrew

      1. Nabeel Ahmad

        Thanks for the the fast reply Andrew!

        It’s not that big of a deal. Its total value is 43$.

        Thanks,
        Nabeel

      2. Andrew Minalto

        Then just go with it 🙂

      3. Nabeel Ahmad

        Hi, Andrew

        Can you kindly tell me what kind of payment term I should agree on in a contract with a supplier exw, fob, etc before ordering my product so that it become their responsibility to deliver my product at my doorstep (dealing with custom and other hurdles also) within time otherwise i get full refund payment.

        I’ll wait for your reply.

        Thanks,
        Nabeel

      4. Andrew Minalto

        Hi Nabeel,

        There’s no such term you’re asking.

        First you need to decide on what shipping method you will use (based on weight/size/value/speed).

        Based on that, you will pick FOB or in case of courier it’s basically EXW pricing and shipping charged separately.

        And you will deal with Customs clearance on your own, unless supplier offers DDP (Delivered Duty Paid) terms OR you use freight forwarder who can take care of it.

        Thanks,
        Andrew

      5. Nabeel Ahmad

        Thanks for the reply Andrew.

        But please kindly answer my questions. I want to gain enough knowledge for my next bigger deals.

        Thanks,
        Nabeel

  26. Hi Andrew,

    Thoroughly enjoy learning from your articles!
    I am based in Australia, and am in a position to place my first order within the next few weeks. I am importing card holders from China, low MOQ (500-600). Wondering if it is still worth using a freight forwarding company?

    1. Andrew Minalto

      Hi Michael,

      Most likely no. The shipment will be very small.

      Andrew

  27. Kim Stocklein

    P.S. Andrew This is Kim Stocklein again. I just see the trade assurance order via Alibaba and shipping terms show Express method, Trade Terms EXW Shipping fee $115 and insurance shows a – shipment date 5 days after supplier receives the balance payment. Can you interpret that for me. Does that mean I am paying $115 to get it to some port and then they are going to bill me for whatever the extra costs are to get it to me in the USA and I will incur some unknown charges? Sorry but this is thoroughly confusing me.

  28. Kim Stocklein

    Hello Andrew:

    I, am in the fishbowl with blinders on and have read many of the posts from other confused people, like me. I am in the process of attempting to buy some keyrings from a merchant on Alibaba website. The merchant is located in China. I am in the state of Wisconsin in the USA. I am thoroughly confused to say the least. I have been quoted $101 shipping rate on the company letterhead which says door to door. (not on the web) They want me to use paypal to pay, which the Alibaba site discourages. I am attempting to place the order on the Alibaba site myself, as the website didn’t recognize the merchant e-mail address. Anyway this merchant has been on Alibaba for 9 years it states and offers Trade Assurance and is a Gold Supplier. Can you please offer some advice as to what to check off on the ordering page when it comes to trade terms? And if I need to take over to get a freight forwarding provider to get these items to my door can you suggest a company for the USA? This is a first time ordering for me and I’d like to have it go smoothly so I can hopefully utilize this merchant for other articles as the have a lot to offer that my business can use on a regular basis. Thanks so much! (I’m not a dumb person, I just need to understand how this works & what to fill out to get the items from point A (China) to B(my front door) without any mess ups or hidden charges) Thanks again

    1. Andrew Minalto

      Hi Kim,

      Thanks for your comment.

      Keyring is a very small product so most likely supplier uses courier to send your order to you, which is what $101 is for. You don’t need a freight forwarder for such a small shipment.

      And PayPal is perfectly fine to use, it offers you some extra protection too. I recommend you check my other articles first though, on how to verify suppliers and what scams you need to be aware of:

      https://andrewminalto.com/alibaba-scam-exposed/
      https://andrewminalto.com/top-10-alibaba-scams/
      https://andrewminalto.com/dealing-with-chinese-suppliers/

      Thanks,
      Andrew

  29. Hi Andrew,
    Great article. So my question is, when should I pay my supplier if it is FOB? My factory is asking to pay when the cargo leaves their warehouse but before arriving at port. However, I thought that FOB means that I only pay when cargo passes through the rails. They said that if I use my own forwarder, my forwarder can send the goods off becore I pay the final balance. What is the normal arrangements when dealing with Chinese (China) suppliers please? Thank you.

    1. Andrew Minalto

      Hi Chloe,

      Usually you pay before goods leave supplier’s warehouse, that’s how it works.

      Andrew

  30. Ben Truman

    Hi Andrew,

    Your blog is great, it’s really helping us get going with our new venture!

    We have a few questions I hope you can help us with.

    1. We have a FOB price for a shipment from China, should we, or they, specify the port our goods will be delivered to?
    2. Relating the the first question, when we contact Woodland Group, will we need to provide the port location for them to give us a quote?

    Thanks for all the information you can provide.
    Ben

    1. Andrew Minalto

      Hi Ben,

      Thanks for stopping by.

      1) Supplier will provide you the Port (sometimes they can offer multiple ports).You can also specify which port you want but that will usually cost extra.
      2) Yes, WG will need to know the Port to provide you a quote.

      Hope this helps!

      Thanks,
      Andrew

      1. Ben Truman

        Thanks for the fast response Andrew!

        One more thing for my own clarity, the FOB price is for the supplier to get the goods to one of their own countries ports, from their warehouse, in this case in China. Then, WG will take it from there, to our door. I believe I misunderstood to begin with and though FOB was a price from the supplier, to our, UK port.

        So basically, there are two parts to the delivery.
        1 . Supplier will send the goods to their country port, (this is the FOB price)
        2. WG will take the goods from the countries port (in China), ship it to our door in the UK, and sort out all customs, handling fees, tax etc and present us a nice easy fee for us to pay in the end?

        Am I correct? Sorry for being dense.

        Many thanks,
        Ben

      2. Andrew Minalto

        Yes, exactly that! 🙂

        Andrew

  31. Hi Andrew

    Great post, I have a question about CNF shipping.

    I have a container being shipped from china to Felixstowe, this container I have sold to a company in the UK with CNF shipping so they will collect the container at port, I’m unsure who pays the VAT is it my company or my customer as my understanding is that as the container hasn’t cleared customs this is down to my customer to pay all import duties and VAT. is this correct?

    1. Andrew Minalto

      Hi Jim,

      This will depend on which company is shown in documents as a receiver but I would recommend you ask the freight forwarder you use or Customs clearance broker for advice on this specific situation.

      Andrew

  32. Kyne Slinger

    Good Day Andrew,

    I am based in South Africa and supplier in China. My customer is in South Africa and we are delivering full 20ft containers FOB from the supplier. The client is paying us upfront and taking over at the port for the FOB to South Africa, so essentially I am just a middleman between receiving money from the client in SA and paying the supplier in China for FOB.

    Do you have an idea what VATs/levies/taxes I would incur in China for the goods? As the client would take on the customs & duties into South Africa.

    Look forward to your response.

    Regards,
    Kyne

    1. Andrew Minalto

      Hi Kyne,

      I’m sorry but I have no idea on how taxes/import duty etc. works in South Africa….

      IF goods are bought on FOB basis in China, there shouldn’t be any extra taxes at China end, so that should be all fine.

      Andrew

  33. Akshay Milind Korlekar

    well explained for a dummy like me !

    1. Andrew Minalto

      Good stuff! 🙂

  34. Hi Andrew,
    Thanks for the informative post. I have 2 questions I was hoping to get your advice on. I placed a large order FOB with my supplier. 80% of the goods will ship to the US and the rest to Canada using 2 separate freight forwarders. My supplier will not pay the customs and loading fees for the Canada shipment, saying they already paid it for the US shipment, even though all the goods are in FOB. What is your opinion on this? What do you suggest I do?

    My second question is, if an order contained 2 or 3 different commodities being shipped to the US, are there separate customs and export fees for each commodity (port is Shanghai) as though they were separate shipments or is it bundled together?
    Thanks so much for your help!

    1. Andrew Minalto

      Hi Gia,

      Thanks for your comment.

      1) I would agree to them – you will probably need to cover additional fees that occur by SPLITTING your order in 2 half. As it does cost them more.

      2) It’s bundled together, it will just be a separate line for each item in the Customs declaration. But usually it does not cost you anything extra or costs very little (per each additional line).

      Thanks,
      Andrew

  35. Hi Andrew,
    I’m currently in the process of negotiating shipping with a supplier on Alibaba for large quantity of small items. We have agreed on a price for shipping via TNT Express $230, however I replied asking under what trade terms and the supplier replied with FOB.

    I’m finding these trade terms a little confusing as I’m new to importing from china, am I right in thinking this is the incorrect trade term for TNT Express.

    I want the items delivered to my door where I just pay for the UK customs charges.

    What trade term should I request for TNT Express?
    I was thinking DAP, am I correct?

    1. Andrew Minalto

      Hi Mikey,

      Thanks for your comment.

      It’s not unusual for Chinese suppliers to use FOB terms even when express courier shipping is involved. It could be that supplier simply made a mistake or misunderstood you.

      Just double ask that COURIER/EXPRESS (door to door) shipping will be used, with a TRACKING number and if they say YES, it should be all good.

      Thanks,
      Andrew

  36. Mook Noonan

    Hello Andrew,
    I am a newbie here, I would be really grateful for your advice, basically i am going to order 200 unit of hamper basket from China by Alibaba and its $10 each with FOB term to Southampton Port. Is there any hidden cost on that in China?

    Regards

    Mook

    1. Andrew Minalto

      Hi Mook,

      Yes, you will get hit by many hidden costs when your shipment arrives in the UK – port fees, unloading fees, storage fees, customs clearance fees, import duty, VAT etc.

      This can be hundreds upon hundreds of pounds!

      A much better way to organise your shipment is by using a freight forwarder – company that can handle all these tasks for you and give you a FIXED cost before goods even leave China. Here’s company I recommend for people in the UK:

      https://www.woodlandgroup.com

      Thanks,
      Andrew

  37. Mark Wiersma

    Hi Andrew,

    I am about to order a whole pallet of high expanding non explosive mortar from China, condition right now is CNF. Thanks for explaining this. You strongly advise to use a shipping agent and I will consider this. You recommend Woodland Global, but I am on Mallorca and I need to import it through the port of Barcelona I guess. Do you know another shipping agent which could serve me ?

    Kind regards,
    Mark Wiersma

    1. Andrew Minalto

      Hi Mark,

      I’m sure that WG can ship to port of Barcelona too so just get in touch with them and see what they can do for you!

      Andrew

  38. Hello I’m am trying to purchase a item from Alibaba and I’ve been quoted EXWShantou : USD 0.27 I’m trying to understand how much is that in “America” United States dollars I’m confused

    1. Andrew Minalto

      USD 0.27 means that it is $0.27

      So 27 cents 🙂

  39. Ariane Jones

    Hi Andrew,

    How would you import from China (through Alibaba) 1kg of Cashemere yarn? It’s for a feasibility study for a small family knitting business in France. They quoted ex-mill and I asked them door to door.
    Thanks for help

    1. Andrew Minalto

      Hi Ariane,

      Just ask supplier to organise courier shipping for you.

      Then pay supplier for goods & shipping costs and wait for your order to arrive.

      Andrew

  40. Hi Andrew!
    I’m about to buy some products from China and to deliver to US-amazon, the manufacturer from China offered me a good price/ piece including freight cost, he said it’s door to door price, and i asked to be with DDP and to be air transport, air Expres. Do i need to pay something else? The products will arrive to amazon without me to worry?
    Do i need to ask for more things about the delivery?
    Thank you very much!

    Claudia

    1. Andrew Minalto

      Hi Claudia,

      Product won’t arrive to Amazon just like that…

      Amazon can’t act as your importer – they won’t clear goods through Customs for you. So it won’t work.

      You need to find a Amazon prep company or freight forwarder in the US who can first received goods from China (clear through Customs) and then forward shipment to Amazon.

      OR some courier companies can also do this for you for extra cost, so you need to communicate with them what you need to do to make this happen as there will be paper work involved etc.

      Thanks,
      Andrew

  41. Hi Andrew,

    I’m looking to order some graduation gowns from a company on alibaba to be delivered to my door in London, they have given me a TNT express fee cost at $260 for 5 working days but I don’t actually need them for about 2 months. I was then given a CNF price for $60 with the supplier giving warning about all the extra prices afterwards. Whats the best way of approaching this?

    1. Andrew Minalto

      Hi Megan,

      Definitely go with the TNT Express option.

      With CNF it will be a LOT of hassle for you and lots of extra costs – you will end up paying more than those $260 for courier.

      Thanks,
      Andrew

  42. Hi Andrew,
    Thanks for the post,it is so helpful. I’m a bit confused about asking my supplier for fob price and then getting door to door delivery. I thought fob would drop the items in a China port and door to door would pick the items from the manufacturer. If I use door to door service, shouldn’t I ask for exw price?

    1. Andrew Minalto

      Hi Neiza,

      Technically yes BUT usually door to door means from port in China to your door.

      You could ask for EXW price BUT it means you will pay more in exporting fees in China to your supplier. So it’s best to have supplier send goods to port and then freight forwarder takes over from there.

      Thanks,
      Andrew

  43. Franklin Menjivar

    Hello Andrew, very useful information. Although I am still very lost. Im starting a business buying truck tires from china to sell in North America. Im using Alibaba portal right now. What I would like to know is how much would I be paying for the product to be put in my hands? What charges should I worry about? Im new to this and really have no idea about any of it so far.

    1. Andrew Minalto

      Hi Franklin,

      Please don’t do it – stop right there.

      if you’re asking just simple questions on a public blog, you’re miles away from making right decisions for your importing deal.

      Start by reading my blog from A to Z and LEARN how it all works! The information is here – you just need to read it:

      https://andrewminalto.com/start-ebay-business/

      Thanks,
      Andrew

  44. hi Andrew !
    What forwarder company you may recommend to use to import goods from China to Canada?
    Thank you, Victor

    1. Andrew Minalto

      Hi Victor,

      I don’t have any recommendations specifically for Canada but WG also works in North America:

      https://www.woodlandgroup.com/get-in-touch/a-global-network/

      Thanks,
      Andrew

  45. Michael Barry

    Hi Andrew,
    Woodland global dose not seem to be coming up when I click the name, have they changed name by any chance ?

    Thanks
    Michael

    1. Andrew Minalto

      Hi Michael,

      Yes, they’re now called Woodland Group:

      https://www.woodlandgroup.com

      Thanks,
      Andrew

  46. Hi Andrew,

    Many thanks for great explanation.
    It was very helpful…

    Best of luck.

    1. Andrew Minalto

      You’re welcome Haika!

  47. Thank you. it is very informative for the beginners like us

    1. Andrew Minalto

      You’re welcome! 🙂

  48. Hi Andrew,

    Good day! I am a newbie into this and I would like to find out if you by any chance know any or could you recommend a forwarding company who delivers door-to-door to Philippines. The goods will be purchased from Alibaba.com (from China) which I need to get delivered to my doorstep in Philippines.

    Thank you!
    Vince

    1. Andrew Minalto

      Hi Vince,

      Contact this company:

      https://www.woodlandgroup.com

      Thanks,
      Andrew

  49. Hi Andrew,

    Thank you very much for the post!

    I’m from Spain and I want to import some python leather bags from China throughout Alibaba and I have no idea about shipment methods. The supplier gave me the price of goods and then the price for shippment with DHL. I would like a door to door service but I dont know what kind of trade term it is… FOB, CIF?
    I dont want to get my package stopped in the port even thought I should pay the import duty and VAT, but where or to who do I have to pay for it?

    As you can see Im completely lost! I will appreciate your help,

    Thank you,

    Lara

    1. Andrew Minalto

      Hi Lara,

      Thanks for your comment.

      IF supplier gave you shipping price/quote for DHL, that means the goods will be shipped via DHL courier, door to door and you don’t have to worry about customs clearance process as DHL will doit for you.

      Andrew

  50. Ravi kashyap

    Thank you for the valuable information Andrew.

    Many thanks

    Ravi

    1. Andrew Minalto

      You’re welcome Ravi!

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