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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. This is honestly one of the most useful things I have found from a quick Google search. Thank you! Would love to hear more about working with the freight forwarder. I.e. What info must I provide them and what should I expect back?

    1. Andrew Minalto

      Thanks Susie!

      I will have a shipping post tomorrow that goes into more detail on this.

      Thanks,
      Andrew

      1. “I will have a shipping post tomorrow that goes into more detail on this.”

        Hi Andrew could you provide a link please?

  2. Hello Andrew,

    Thanks a lot for this information. You’ve saved me from loosing my money. Let me look for a freight forwarding company right away.

    1. Andrew Minalto

      You’re welcome! 🙂

  3. John Edwards

    Fantastic post MORE and more in-depth detail on how to really succeed on eBay!

    Nice one Andrew.

    1. Andrew Minalto

      Thanks John!

  4. Hi Andrew, great thread and info on here, I wonder if you could offer some advise, we’re a company that has arranged a freighter to ship 2.56cbmtrs of product to Australia, value of goods £3000. The customer was quoted – we can quote to Sydney port only . There was no reference to CFR or CIF just as quoted.

    The customer is being charge around £1000 for handling docs and goods by two different companies, one handling disembarkation and the other I believe handling customs and paperwork, It does seem very expensive.

    Is it common to have two companies handling the unloading and customs charges.

    Any thoughts or advise on this would be very welcome, our window to sort this out is narrow, by thursday latest.

    1. Andrew Minalto

      Hi Paul,

      Yes, it’s common that two companies are involved in this process.

      £1000 does sound like a total rip-off, I agree. This is exactly why I always recommend getting a door to door quote as these companies I think are taking advantage of small clients/individuals and simply over-charging them.

      I don’t know even what you can do about this right now as you don’t have time to look for better deal probably as port storage fees will eat up your savings anyway. Best advice I can give is to next time use a good freight forwarder and deal with complete door to door service.

      Andrew

  5. Hi Andrew!

    This is a great blog. Wish I knew it before.

    Can you tell me how does a CIF invoice/informa write or any sample? The one my supplier is giving is not accepted by my bank.

    Thanks in advance.

    1. Andrew Minalto

      Hi Mahmud,

      Your bank probably can give you advice on what needs to be changed.

      Usually pro-forma invoice has all the buyer details, seller details, payment information, shipping information etc.

      Andrew

  6. Hi–

    Can someone elaborate please that if terms are CIF Regina, should Destination Delivery Charges at Vancouver Port be covered by shipper? Or will importer be responsible for this?

    Thanks
    Solomon

    1. Andrew Minalto

      Sorry, which charges you’re referring to?

  7. ahamed ibrahim

    Hi Andrew,

    I am happy to see you are answering for many new business people. i really appreciate your answers and god bless you.
    i am also a beginner in importing. i am living in Australia . i have got few reliable cashew kernels suppliers/manufacturers from India who could be my supplier for importing cashew kernels into Australia . i really wanted to do import cashew kernels to Australia but i haven’t got an idea of how to start and getting an order from the buyers in Australia. when i made the calculation to see my profit after all expenses , my selling price for a kilo of cashew is a dollar more than competitive importers in Australia.
    how could i approach the buyers with this competitive price ?
    do i need any kind of “lab test certificates” for Australia before importing (like sgs, bicon,bio sanitary etc )?
    kindly please answer my doubts and very well appreciated
    Thank you.
    Regards,
    ahamed ibrahim

    1. Andrew Minalto

      Hi Ahmed,

      Yes, as far as I know you will need various certificates to import such food items into Australia.

      As for the price – well, your competitors probably import in much larger quantities and get lower price this way. Price will also of course depend on supplier/product quality, shipping costs etc.

      Andrew

  8. Hi man,i really appreciate the work you do,your advices are so very helpful and god bless you,regard’s

    1. Andrew Minalto

      Thanks!

  9. Ben Childs

    Hi

    I want to purchase 200 bajot tables from India and have a supplier. However he says he will send them to Southampton Docks. I don’t know anything about import tax or what I need to do, or if I need to do anything regarding these goods coming into the country. Please advise

    1. Andrew Minalto

      Please contact a freight forwarder who can help you with customs clearance and shipping goods straight to your door:

      http://www.woodland-group.com

      Thanks,
      Andrew

  10. amanda Daniels

    Hi Andrew, Unbelievable that i still have a question after all of that information.But here goes. I am importing equipment from China and have been quoted a CIF amount to the LA port. I realize i will be responsible for freight forwarding to my location, but my question is. Who pays Duty and Taxes and customs fees at the port of LA? Is that on my or my shipper in a CIF price quote. Thanks so much in advance,
    Amanda

    1. Andrew Minalto

      Hi Amanda,

      CIF price means – cost, insurance and freight. YOU are still liable for any taxes and custom fees so you’ll pay these.

      Andrew

  11. Ruman Khan

    Hello Andrew,

    Thanx for sharing your valuable information to all the wonderful people here.

    Your blog, if ever to be described in one word, “Fantastic”.

    Keep up the good work. Hope to get more information from you in future.

    Thanx

    1. Andrew Minalto

      You’re welcome Ruman! 🙂

  12. Hi Andrew!

    I just want to say a big THANK YOU! for sharing all this information. I find your blog most helpful for putting ideas in practice. All the best!

    1. Andrew Minalto

      You’re welcome Otilia! 🙂

  13. Hi Andrew,
    i am planning to import Hospital scrubs from Pakistan to Canada.i don`t have experience and this is first time.Please let me know which term is best for me if i will use sea or air, i am going to start my own business.Please guide me i really appreciate you to guide me,

    Best regards,
    Imran

    1. Andrew Minalto

      it’s best to go with FOB terms Imran so you don’t have to pay any additional fees in Pakistan.

      And then simply work out delivery/customs clearance fees with the freight forwarder you’ll be using.

      Thanks,
      Andrew

  14. Hoo boy, just when I thought opening my little side business to sell handmade things at craft fairs was going to be easy and fun…

    I’m in the middle of negotiating with a supplier in China for 25 picture frames, which will cost me $200 (USD). I hadn’t even considered import taxes and customs and….I’m literally sitting here gobsmacked.

    So, if the supplier has agreed/offered FOB, I have a couple of questions that I hope you can answer.
    1. Do you have any recommendations for a freight forwarding agent in the United States?
    2. I live surprisingly close to one of the biggest US sea ports, but it’s on the east coast. However, if the goods were (somehow) to arrive there, would I be able to go pick them up and deal with customs at the port?

    I know these are such noob questions, but the artwork I plan on making and selling requires a specialized frame which I can’t find on eBay, Amazon, etc. for less than $20 apiece. I wanted to keep my overhead low so I can keep my prices low enough to be of interest to the kind of people who go to craft fairs/shows and farmers markets. I _could_ sell them without the frames, but they wouldn’t be as nice.

    Sigh. I’m beginning to wonder if I’ve bitten off more than I can chew…

    1. Andrew Minalto

      Hi Jazz,

      Importing just 25 picture frames from China won’t make any sense. You’ll pay LOTS of extra money for shipping, taxes etc. – it’s simply not worth it. You would have to buy at least 100-200 frames o even consider it.

      So my advice would be to look for a USA based wholesaler (on Google, WholesaleCentral.com) to buy these frames locally, in small bulk.

      At least in the beginning.

      If you can get them @ $20 a piece, that will still be cheaper than importing 25 pieces from China.

      But with some more research you should be able to find a wholesaler who can do these cheaper for you.

      Thanks,
      Andrew

  15. thank you exllant information
    so much helpful

    1. Andrew Minalto

      You’re welcome Jay! 🙂

  16. What does EXW mean?

    “if you choose exw term, you can easily know which forwarder’s solution is good.”

    Thank you

    1. Andrew Minalto

      Hi Richard,

      EXW (Ex Works) price means that it’s basic product price AT the factory. You would have to pay/organise shipping from there to port, insurance, freight etc. etc.

      Thanks,
      Andrew

  17. Hi Andrew,

    Thanks much for dedicating your time answering our questions, very much appreciated. I have a quick question for you: If a supplier from China tells me “The EXW unit price is $4.35/pc. And shipping fee to the USA is 60USD. So total price = $4.35*30 + $60 = $190.5.” What would this mean to you? Are they pretty much stating that the goods will come to my door? Their site shows a chart with the express shipping method via DHL, FedEx, or Postal Service and their corresponding shipping time. I found the following formula on another site which makes it a little more confusing to me I’m not certain how accurate they are though:

    EXW is a basic price
    EXW + handling = FOB
    FOB + freight cost = C&F to any place that you may wish.

    Thanks!

    Lucie

    1. Andrew Minalto

      Hi Lucie,

      What shipping method you’ll be using for that order? Courier? Sea freight?

      Let me know.

      Andrew

      1. I would definitely prefer courier (DHL or FedEx).

        Lucie

      2. Andrew Minalto

        If it’s courier, they will take care of customs clearance procedure for you and you just need to pay their invoice which will include import duty, VAT & admin fee.

        Andrew

      3. Ok, thanks much Andrew!

        Lucie

      4. Andrew Minalto

        No worries! 🙂

  18. Hi Andrew,
    I am totally new to this industry, I have a simple question
    I am planning to order iPhone cases from China and requesting the seller To ship directly to Amazon UK warehouse. What is the best Trade terms I should select, as I do want to incur any type of additional cost

    Regards
    Krishna

    1. Andrew Minalto

      Hi Krishna,

      It’s not that simple – you can’t simply send such shipments to FBA.

      Please read importing guide on FBA website.

      Thanks,
      Andrew

      1. Krishna

        Hi Andrew,
        Thanks for the quick response, sorry I missed word [not] in my previous query
        I don’t want to incur any type of additional cost

        Regards
        Krishna

  19. Hi Andrew

    I am about to start importing copper from china to the uk and I am curious about shipping terms.

    Something isn’t adding up when reading your blog though I will explain,

    FOB – Free on Board (or Freight on Board). This basically means that the cost of delivering the goods to the nearest port is included but YOU, as the buyer, are responsible for the shipping from there and all other fees associated with getting the goods to your country/address.

    Then,

    Hi Riaz,
    FOB just means goods loaded onto ship and carriage paid to your nearest port, that’s it. Nothing else.
    Customs clearance fees, VAT, import duty and delivery to your address is NOT included in FOB price.
    Thanks,
    Andrew

    To me these look like 2 different answers ? Does FOB include shipping to my country ?

    In the first answer it says it doesn’t, but in the 2nd answer it says it does ?

    Your help is appreciated

    Regards

    Derek

    1. Andrew Minalto

      Hi Derek,

      Yes, my bad there – I got mixed it up myself for a very simple reason that very often, if goods are small, Chinese suppliers actually include sea freight cost in FOB price.

      But by standard definition – FOB does not include sea freight cost.

      Also, usually suppliers state PORT of unloading – so for example – FOB Shanghai. This means that FOB price includes delivery to Shanghai port only. Ports located in different locations may incur additional charges.

      Thanks,
      Andrew

  20. Rico Coballes

    Hi Andrew,
    First I would like to thank you so much for all the informative answers to all the questions posted, its a big help to everyone like me who aspires to start an import business.
    Got a few questions hope you find yourself available to answer.
    I want to import rice from Thailand to UK and not sure where to start, I’ve gone through HMRC website on how to start imports and so on but would like to ask you a favor to guide me through. First what license should I apply before doing this import, secondly how can I guarantee that the exact order I’ve asked is what supposed to be in a container and not less.
    Thank you so much.

    Regards,
    Rico

    1. Andrew Minalto

      Hi Rico,

      Thanks for your email.

      I’m sorry but I have no experience whatsoever with importing food items from outside EU so I don’t know what kind of certificates/permissions you’ll need to import rice from Thailand.

      You should probably check trading standards website for more info on this.

      Thanks,
      Andrew

  21. Hi Andrew,

    You’re unaware but your advice has saved me SO much time over the past few months!

    I’m currently negotiating a deal however i’m unsure as to which payment method to go with.

    T/T, D/P, D/A and all the rest! wheres good old paypal when you need it 😉

    Eagerly awaiting your reply,

    All the best,
    Joe

    1. Andrew Minalto

      Hi Joe,

      Great to hear that! 🙂

      PayPal is usually my number one choice.

      If that’s not possible, do the order via Alibaba – so you get trade assurance protection.

      Last resort is direct bank transfer but of course then you don’t get any protection whatsoever so be very careful with this and only use bank payment if you’re 110% confident in the supplier you’re dealing with.

      Thanks,
      Andrew

  22. Umang jain

    Hi Andrew,

    Greetings for the day

    Came across your blog and found it to be very informative. Thank you for this initiative.

    I have a query regarding CNF and hope you could help me understand it. My supplier from china in a mail replied- ” CNF 4.8 USD PER SET BY LCL , not BY AIR”. I couldnt understand what does it mean.

    Request if you can make me understand it.

    Thanks in advance.

    Regards,
    Umang

    1. Andrew Minalto

      Hi Umang,

      It means you pay CNF – $4.8 USD per set (of whatever you order there) via LCL – which stands for less than container load via sea freight.

      So $4.8 per set, cost of product and freight via sea freight, in a mixed container.

      Thanks,
      Andrew

      1. Umang jain

        Hello Andrew,

        Greetings for the day

        So what I am understanding is USD4.8 include the freight also along with the product.

        Thanks a lot,
        Umang

      2. Andrew Minalto

        yes, correct.

  23. Hi Andrew, Thanks for all the explanations! Really informative!

    But, I also have a few small questions. It’s about smaller freight compared to the others (based on the blog comments).

    I am ordering just a few hundred pieces of a certain product from a supplier in china. These pieces don’t weigh that much and they are small in size too. The total weight will be around 25KG. They will send two boxes of the size: 50w x 80h x 60h (This is one box and sizes are in centimeters).

    My question is, do you recommend a “freight forwarding company” for this amount of KG and packages?

    Or do you recommend a courier service? In that case I would opt for the incoterm CIF at the supplier and then let a courier service pick up the goods from the port and transort it to my doorstep.

    Last question. Does it matter (in my case) if the supplier sends it by air or by sea, price wise? (Assuming ithe incoterm is CIF).

    1. Andrew Minalto

      Hi David,

      For a 25kg package you want to use nothing but a courier service! Air freight and sea freight won’t be cost effective for such small shipments as you’ll actually pay more in various fees than for the shipment itself.

      So just go with the courier, FOB price and ask supplier to find cheapest courier for you. Then they just charge courier shipping price in your invoice, together with product cost.

      Thanks,
      Andrew

  24. Hi Andrew,

    Do you have any tips for great freight forwarders from China to USA?

    Thanks,
    Monika

    1. Andrew Minalto

      Hi Monika,

      Same WG that I recommend in Uk works in USA too:

      http://www.woodland-group.com

      Thanks,
      Andrew

  25. hi Andrew,please help me for my basic questions, FOB price means the cost of delivering to the nearest port,the nearest post means whom? the supplier or the buyer port and then the freight and insurance charges are bared by the importer,is it so. CIF means cost freight and insurance will be not charged to the importer is that statement okay and delivered to which port ? and please let me know what are the cost included in FOB,

    1. Andrew Minalto

      Yes, FOB means product plus delivery to nearest port (supplier’s port).

      and yes, CIF means that sea freight and insurance is included, to buyers country port.

  26. Hi Andrew

    I appreciate your blog here!

    I am trying to purchase a kitchen equipment from China and I’ve been quoted a price of $1600 CIF (Kolkata).

    I do understand what that means for me, but what exactly are the costs that I am going to end up incurring ?

    1. Andrew Minalto

      Is this for personal use? Or bulk purchase?

  27. Hi Andrew

    I am also new to importing from China, and I was wondering if you could help me

    I am importing 10 scooters, and the dimensions are per piece (individually packaged):

    Carton size: 58*45*27CM,1PCS/CTN, G.W:15.5KG

    The supplier has quoted me the CIF price of 295 USD, but from the comments I have read online, there may be a lot of hidden costs involved. I was also quoted the FOB price of 525 USD for the same shipment, so I was wondering if it would be better?

    The goods would be shipped to the port of London, so it isn’t far for me to go get them myself when they arrive, but I was wondering if there was a difference between CIF and FOB that would prevent me from doing so?

    Also, if I were to use a freight forwarding company, would they have problems with collection based on me using CIF over FOB?

    1. Andrew Minalto

      Hi Hsin,

      Yes, I would recommend you go with the FOB price when possible as otherwise you will be hit with various extra charges. freight forwarders can do either way of course but at added cost.

      Thanks,
      Andrew

      1. Thanks Andrew

        This is what my supplier emailed me:

        You don’t need to pay any additional cost. The CIF price include local charge and shipping fee to London port.

        So I guess she is lying?

      2. Andrew Minalto

        sorry, I thought it was ex-works price because it was cheaper than FOB.

        CIF does include include everything up to London port, yes BUT why it’s cheaper than FOB?

        It does not make sense…

      3. Thanks for your advice

        They are an ali baba supplier, so I have been as cautious as I can, doing as much research as I can. They appear to have been manufacturing for 5 years and are gold suppliers, they have their own company website, and the details on the PI they want me to pay is for their company HSBC bank account based in Hong Kong

        I have been toing and froing with this supplier for the past month, mainly because they were shut for 2 weeks due to the Chinese New Year, and I have conveyed interest in putting a larger order in if this one goes well

        I have emailed the supplier again for more details of this CIF courier, so fingers crossed

        Thanks again

      4. Yes, that was what I was initially concerned by

        My supplier quoted me the higher FOB price first with one shipping company, but as I asked a lot of questions about additional costs and freight forwarding services, she then said she found another company that can do the shipping at the cheaper CIF price

        Is this unheard of?

        I can easily find details online for the FOB company SHENZHEN JOINT A SUPPLY CHAIN CO.,LTD, but so far, nothing for the CIF company
        Shenzhen HYD Logistics Ltd. – the supplier has given me their contact details, so I am waiting for their response to see if there is something dodgy going on (seems to be a lot of shipping companies in Shenzhen)

      5. Andrew Minalto

        The price difference seems way too high to me…

        I would start questioning how legit that supplier is, it could be that they are up to something and just lowered the price to get your order in. Not saying it’s the case 100% but it does look suspicious to me.

  28. Ira Caplan

    Thanks Andrew; very helpful article. I plan to visit your site again researching similar topics and gain familiarity with others you decipher.
    Best,
    Ira

    1. Andrew Minalto

      You’re welcome Ira! 🙂

  29. Hi Andrew,
    I’m still a little fuzzy on some of the shipping options from China to the USA.
    I’m about to start pitching local big box retailer managers with my product and I would like to have my numbers as accurate as possible before I configure my pricing for them.
    I have negotiated with two or three suppliers in China for my best possible price but I’m still leery about any surprise fees at the port.
    Is it possible for you to tell me:
    Is it accurate to say that suppliers in China get better rates for shipping then I would get on my own?
    When discussing FOB vs. CNF (or CIF), which one will be more beneficial monetarily for myself here in the USA?
    What fees will I have to pay at the port for an FOB shipment vs. the fees I will have to pay for the other 2?
    When discussing CNF vs CIF, is it really worth paying extra for the insurance?
    Is this insurance for damage to the goods, or for the goods just completely disappearing?
    Can I actually transport goods on a maritime freight ship without insurance?

    I have seen you mention on here, and I have heard others mention elsewhere, that the first few times I should get a freight forwarding company to handle my shipment. My confusion on this is the following:
    The consensus is that I should let them handle it first few times, but whether they handle it 3 times or 25 times, wouldn’t I have to handle it on my own at some point? Why not just tackle that hassle the very first time in order to save money?
    Does the freight forwarding company only handle the shipment upon its arrival at my destination port in my local city?
    I would certainly prefer someone to do the work for me but I am working on an extreme shoestring budget with no wiggle room to spare.

    Another question I have is about air freight, for what types of products which you recommend air freight and how much more expensive have you found that it is over maritime freight?
    Thanks for all your help!

    1. Andrew Minalto

      Hi Joe,

      There are too many questions to answer them in this comment reply.

      But I can definitely recommend you using a freight forwarder (who can also help you with all these questions) and no – actually you can save some money by using a freight forwarder VS doing it yourself as you’ll get better shipping rates, faster customs clearance (which also costs money for extra days goods are at port) and delivery of goods to your door.

      Thanks,
      Andrew

  30. Hi, Nice Blog! I was wondering if anyone planning to export from India, does he need to pay the VAT in India? For Example If i m exporting Rice from India to UK, What taxes i m bound to pay? please help me understand this, i appreciate.
    Regards,
    Jigar

    1. Andrew Minalto

      Hi Jigar,

      I’m not familiar with tax system in India so you’ll have to find out whatever you have to pay any export taxes in India when exporting to UK.

      Thanks,
      Andrew

  31. Hi,
    is there difference between ‘CIF’ and ‘FOB Destination’?

    1. Andrew Minalto

      CIF stands for Cost, Insurance and Freight.

      FOB Destination is usually used as term to describe destination port for that FOB shippment.

      1. Does it means that FOB Destination is the same at CFR?

        I am also very confused with the term FOB Destination since according to the Incoterms FOB is the port of origin, not a destination…

        Really like your blog!

      2. Andrew Minalto

        with FOB terms it’s port of origin, yes as FOB does not cover the actual shipping cost.

        But sometimes suppliers use FOB as all inclusive pricing too, especially with small orders where sea freight costs just say $50 to them. In that case they could mention Destination port too.

        You really need to chat with your supplier and clear the air on what they mean by FOB exactly.

        Andrew

  32. Hey Andrew,
    im trying to buy something from china through Alibaba and want it shipped to New York and not have to deal with anything other than receiving it at my door. What would be the best way to do that?

    1. Andrew Minalto

      Hi Will,

      How big the shipment will be?

      if it’s a small package, you can simply use any courier service and they’ll take care of everything and deliver goods right to your door.

      If it’s a larger, sea freight or air freight shipment, you’ll want to use a freight forwarder for Door to Door service, such Woodland Global.

      They can collect goods from supplier in China, ship over to USA, do customs clearance and deliver goods to any address you want.

      Thanks,
      Andrew

  33. martin richardson

    hi andrew, having read most of the post here, is was wondering if you could advise on this, i ordered and paid for a timber grab and rotator to fit a small 3 ton excavator, i paid fob, $540… which very roughly is £380. i am now looking at charges of £393 to pay just to collect it from port..lcl terminal handling£70… uk documentation £90….uk handling £25…. uk warehousing£19.73… customs clearance£55…. deferment fee£30 ….import duty and v.a.t£104.68… this has all come from CMI, CARGO MOVERS INTERNATIONAL LTD in essex…. having found the commodity code for item it turns out there will be no duty to pay, could you clarify maybe , as i am not a buisiness and do not intend to sell the item, just use it myself to help with lifting MY firewood to keep our three woodburners fed at our home , is v.a.t applicable? the thing is you cann read to much information or listen to avise and help by different people and it becomes to bloody confusing!! HELP …. we have establihed there is no duty to be paid, is there v.a.t? and am i right in noting all these charges seem extorionate?! is there a goverment ombudsman who can determine if all these charges are fair!!! PLEASE HELP… many . regards martin. p.s my half pallet is due at port 24/1/15 after three different due dates!! at felixstowe. cheers

    1. Andrew Minalto

      Hi Martin,

      These fees seem about right. That’s why sea freight is usually used for bigger orders, not just one item as port & related fees are almost fixed.

      You’ll still have to pay VAT though ,even if import duty is 0%.

      Thanks,
      Andrew

  34. Hi Andrew,

    Fabulous blog! Thank you. Question – when importing from China, is it safer to go with CIF or CNF? Wouldn’t it be better to have insurance?Thanks

    1. Andrew Minalto

      Yes, of course – it’s always better to have insurance.

  35. Thank you for your prompt reply. I am actually exporting to Mumbi. I was quoted $8078 /MT-FOB. Therefore does that mean $8078 per metric ton for a container to be exported?

    1. Andrew Minalto

      not sure on that one, I haven’t imported anything weighting tonnes before…

      You should probably just ask your supplier to clarify this.

      Thanks,
      Andrew

    2. Great thanks Andrew.

  36. Thanks for your blog I benefited a lot
    just have question regarding shipping, I am starting export business From Indonesia to USA. Exporting seeds such as clove, black paper. Any advice with shipping company.

    1. Andrew Minalto

      I’m sure there are many local freight forwarders working in Indonesia – just contact several and get quotes to compare.

      Andrew

  37. Hello Andrew, looking at importing clothes from china. first time at this what is the smallest amount a company like woodland global will consider working with?
    thanks scott

    1. Andrew Minalto

      Hi Scott,

      There are no minimum order really – WG can do the shipment no matter how small it is. Of course, you have to keep in mind fixed admin costs and such so sending few kgs won’t be worthwhile.

      Thanks,
      Andrew

  38. Hi Andrew,

    Nice blog!
    I am new to importing and procurement. Trying to get answer for a very basic question. If i want to purchase an equipment worth 1000 USD, cant I raise an underpriced PO for 500 USD, make the supplier invoice me for 500 USD alone. And pay the remaining 500 USD to my supplier through other channel like black money. How will the customs in this case find out that my PO is underpriced?

    Regards,
    Ray

    1. Andrew Minalto

      I’m sorry Ray but I won’t even comment on such illegal activities.

  39. Alfredo Moya

    Hi Andrew

    I am hoping to import some goods from China (alibaba) to the United States. I would like to start my business on ebay. Which it will be the best way to bring product to my home. .

    1. Andrew Minalto

      Hi Alfredo,

      Thanks for your comment.

      Please check out my Importing from China guide for more details on this.

      Thanks,
      Andrew

  40. I’m about to purchase a new forklift from Jcb UK for the amount of £75k, I would like to export it to the gulf (Saudi Arabia). I’m doing this on a individual basis so have no company entity setup.
    How best to to make this deal efficient? Will I be charged UK taxes, vat, etc. Should I let the buyer deal with the shipping?
    Should I go for the fob or other or other option? Should I arrange the insurance separately? Any advice, guidelines would be much appreciated.

    1. Andrew Minalto

      Do you buy it for re-selling in Saudi Arabia?

  41. Hi Andrew
    Great post
    there are some questions in my mind
    i were to buy stuffs worth 40.000USD
    20″ container
    what payment method is best for me?

    is it possible if i use escrow or e-credit?

    1. Andrew Minalto

      Hi Eric,

      Yes, Escrow should be taken for amount like that. Some companies will also accept letter of credit from your bank, for orders of that size.

      Thanks,
      Andrew

  42. Great post. I was looking online for information on how to deal with customs to Canada and I stumbled upon your blog. You answered questions I haven’t even thought of yet. Thanks a lot.

    1. Andrew Minalto

      You’re welcome Wes! 🙂

  43. Hi Andrew

    I am hoping to import some goods from Lagos to the UK by L C L

    Do you know of a company ?

    Regards Mike

    1. Andrew Minalto

      Hi Mike,

      Try contacting Woodland Global.

      Maybe they can help you.

      Thanks,
      Andrew

  44. Hi Andrew,
    Hope all is well! What a brilliant blog! I’m from Toronto, Canada! I have a new connection to export scrap metal to India (used railway lines, copper wire and Raw copper).. Can you step me through the process? I would definitely appreciate that.. It would really help me out..
    Thank you in advance!
    Conrad

    1. Andrew Minalto

      Hi Conrad,

      Thanks for your comment.

      Unfortunately I can’ help you with a detailed guidon that as:

      1) I’m not in Canada;
      2) I have never exported anything to India;
      3) I have no experience in scar metal business.

      Good luck anyway!

      Thanks,
      Andrew

  45. Hi Andrew

    Quick question : a CIF HK price for a chinese fabric does include the full chinese VAT ( 17%) or it s possible to get without VAT ?

    1. Andrew Minalto

      Hi Guillaume,

      Exported goods from China are VAT free so you don’t have to pay Chinese VAT on these goods.

      Thanks,
      Andrew

      1. Guillaume

        Thanks . Yes on finished goods it s (allmost) VAT free ( tax refund depend the type of product) .
        However in my case it s pure raw material .
        So you think even in that case , exporting a raw material from China is VAT free ?

        Thanks

      2. Andrew Minalto

        I have never had to pay VAT on any kind of goods/materials imported from China.

        I mean Chinese VAT, not EU one.

  46. Riaz Ahmad

    Hi Andrew,

    looking for some answers to what is included in FOB price I have come accross your blog. Various people have different views on what is included in FOB price. I would like an expert view as to if Custom Clearance and any other charges are included in FOB or is it just the transportation charges?

    From Free on Board, I perceive as goods are free of every exepenses at origin port? or am I just singing from a completely wrong swing!?

    Thanks in advance for clarifying.

    Riaz

    1. Andrew Minalto

      Hi Riaz,

      FOB just means goods packed, sent to nearest port, that’s it.

      Shipping costs, customs clearance fees, VAT, import duty and delivery to your address is NOT included in FOB price.

      Thanks,
      Andrew

      1. Jon Turner

        Hi Andrew,
        Beg your pardon, but the answer you gave to the previous questioner from this one is inconsistent and looks downright wrong. He wants goods shipped from S. Korea to Kolkata, and you say FOB will cover freight cost to Kolkata. That may be the receiver’s nearest port, but it is not the shipper’s. Granted a shipper has discretion to choose among ports and isn’t forced to pick the closest one, but aren’t they restricted to the port of loading, and to a domestic port? There is no such thing as FOB (foreign) port of delivery.
        You are doing a lot to dispel the confusion around international trade, don’t get me wrong, I just want to understand the situation myself.
        Jon

      2. Andrew Minalto

        Hi Jon,

        Thanks for correcting me on this one, you’re correct.

        FOB price does not include actual shipping costs.

        Thanks,
        Andrew

  47. […] the sound of it, you have purchased goods on FOB basis which means that the goods are loaded onto the ship in China but you take care of customs clearance […]

  48. Hi Andrew,
    Very helpful blog.
    I am attempting to import some surgical items from South Korea to Nepal We also import from Malaysia and China. Our nearest sea port is Kolkata, India. We can take charge of the goods from Kolkata. Can you please advise me the freight forwarder that would be the most affordable for shipment of the goods.

    Thank you.

    1. Andrew Minalto

      Hi There,

      If you only need goods delivered to your port, then just ask supplier to arrange FOB terms for you when you buy goods and this will include shipping to your nearest port.

      Thanks,
      Andrew

  49. W. Rory Burnlees

    Hi Andrew , great blog. Also getting into some trading , I want to bring textiles from Chaing Mai to Spain , can I use a UK frieght forwarder or must it be Spanish , if so do you know of a good company preferably Barcelona ? ,

    Thanks,

    1. Andrew Minalto

      You can use a UK freight forwarder, sure but probably it will be easier for you to work with a local company.

      I can’t recommend any specific companies but I’m sure you can find many freight forwarders in Barcelona, just do a Google search, check local yellow pages etc.

      Thanks,
      Andrew

  50. hi Andrew am from Nigeria a first time importer from China.I will like you to advice me on which freight forwarder should I use.
    so my goods will be delivered directly to my company.the products am buying are industrial chemicals like iron oxide,titanium dioxide,ammonia,biocide etc
    I will appreciate your advice
    thanks

    1. Andrew Minalto

      Hi Kalu,

      Thanks for your comment.

      I haven’t sent any goods to Nigeria so unfortunately can’t help you out with this.

      You want to look in your local yellow pages/business pages or attend a trade show related to importing and find freight forwarder this way.

      Sorry about that.

      Andrew

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