INCOTERMS For Bedding Buyers

FOB, CFR and CIF are three different prices for the same goods, and the differences are where the money hides.

What each one actually means

• FOB — the supplier delivers the goods on board the vessel at the named port. Everything after that, including the sea freight, is yours. The supplier handles export clearance.
• CFR — the supplier pays the sea freight to your named destination port. Risk still passes to you when the goods are on board, so you are paying for a freight service whose risk sits with you from an earlier point.
• CIF — same as CFR plus marine insurance, arranged by the supplier. Note that the insurance is usually minimum cover, not the cover you would choose.

The three things buyers get wrong

• Assuming CIF insures them properly. It usually does not. If the goods matter, buy your own insurance at the value you actually need.
• Assuming risk transfers where freight is paid. Under CFR and CIF, risk passes at the port of loading, not at the destination. A loss in transit is your claim, even though the supplier paid the freight.
• Assuming FOB is always cheaper. On a small shipment to a destination where you have no freight contract, a CIF quote from a supplier with volume rates can be cheaper than your own one-off booking.

Which one to ask for

If you import regularly and have a forwarder, ask for FOB. You control the freight, you see the cost, and you can compare suppliers on a like-for-like basis.

If you are testing a route or shipping infrequently, ask for CFR or CIF as well, and compare the total landed cost rather than the unit price. The comparison usually changes the ranking of suppliers.

Where we sit

We quote FOB, CFR or CIF to your named port, and we will tell you which one we think is better value for your shipment rather than defaulting to the one that is easiest for us. Ask for the freight component separately so you can check it.