Your Chinese supplier may quote two prices for the same order: FOB and CIF. Under CIF, the supplier pays for ocean freight and insurance to the named destination port. With FOB, you arrange and pay for the main shipping leg yourself.
However, the difference goes beyond the supplier’s price. These terms affect who books the freight, who arranges insurance, and how much control you have over the shipping process.
To compare FOB vs CIF, look at the total cost of shipping your goods, not just the price on the supplier’s quotation.
What Is the Difference Between FOB and CIF?
FOB (Free On Board) and CIF (Cost, Insurance and Freight) are Incoterms® rules for sea and inland waterway transport.
Under FOB, your supplier delivers the goods on board the vessel at the agreed Chinese port. You arrange and pay for the main ocean freight.
Under CIF, your supplier also books and pays for ocean freight to the named destination port and obtains the required cargo insurance.
Both terms transfer the risk of loss or damage to you once the goods are on board the vessel at the origin port. CIF does not keep that risk with the seller until arrival.
For more background, see our guides to FOB Shipping and CIF Shipping.
FOB vs CIF: Who Pays for What?
| Responsibility | FOB | CIF |
|---|---|---|
| Export clearance in China | Seller | Seller |
| Delivery on board at origin | Seller | Seller |
| Main ocean freight | Buyer | Seller |
| Required cargo insurance | No seller obligation | Seller |
| Risk during ocean transit | Buyer | Buyer |
| Import clearance and duties | Buyer | Buyer |
| Destination charges and inland delivery | Generally buyer | Generally buyer |
Under FOB, you usually select the freight forwarder and manage the main shipping arrangements.
In a CIF arrangement, the supplier typically chooses the carrier or freight provider. You still need to understand the destination charges and arrangements.
The contract and carrier’s terms determine the exact services included in each quotation.
FOB vs CIF Cost: How to Compare Supplier Quotes
A lower FOB price does not automatically mean a lower total shipping cost. Likewise, a CIF quote that includes ocean freight may still leave significant destination expenses.
Consider this illustrative comparison for one shipment from China:
| Cost Item | FOB | CIF |
|---|---|---|
| Supplier's quoted price | $10,000 | $11,400 |
| Ocean freight | $1,000 | Included |
| Cargo insurance | $100 | Included |
| Destination charges and delivery | $900 | $1,100 |
| Total before import duties and taxes | $12,000 | $12,500 |
These figures are examples only, not current freight rates. Actual charges depend on the shipment, destination, and services included.
In this example, FOB costs $500 less overall, even though the buyer pays ocean freight separately.
A different carrier, destination, or supplier quotation could reverse the result.
To compare FOB vs CIF cost accurately, request a breakdown of:
- The supplier’s FOB and CIF prices
- Ocean freight and cargo insurance
- Destination terminal and handling charges
- Customs clearance and final delivery costs
- Applicable import duties and taxes
Check which charges each quote includes so you do not count the same expense twice.
Does CIF Include Insurance and Destination Charges?
CIF requires the seller to arrange cargo insurance, but that does not mean the shipment has comprehensive protection.
Under Incoterms® 2020, CIF requires only minimum insurance coverage unless the buyer and seller agree otherwise.
Before accepting a CIF quote, ask your supplier for the insurance details. Check the insured amount, covered risks, and claims procedure. Arrange additional protection if the coverage does not meet your needs.
CIF also does not mean door-to-door delivery.
The seller pays the freight to the named destination port, but you generally remain responsible for import clearance, duties, taxes, and onward delivery.
Destination terminal, handling, and release charges may also apply. Ask for these costs before confirming the order, particularly when the supplier chooses the shipping provider.
FOB vs CIF: Which Should You Choose?
For importers who regularly ship from China, FOB often offers more flexibility. You can choose your own freight forwarder, compare ocean freight rates, and keep closer track of shipping costs.
On the other hand, CIF may be more convenient if you prefer your supplier to handle ocean freight and insurance. However, you should check the insurance coverage and destination charges before accepting the quote.
Ultimately, neither option is always cheaper. Compare the total costs under both terms to see which works better for your shipment.
Are FOB and CIF Suitable for Container Shipping?
Importers commonly use FOB and CIF for container shipments, but these terms do not always match how carriers receive the cargo.
Under both rules, the seller delivers the goods on board the vessel. In practice, suppliers often hand over containers at the terminal before loading.
For these shipments, the International Chamber of Commerce recommends considering FCA (Free Carrier) instead of FOB. If the seller must also pay for carriage and insurance, CIP (Carriage and Insurance Paid To) may be a better fit than CIF.
Confirm where your supplier hands over the goods before agreeing on the Incoterm.
Compare Freight Costs Before You Decide
Your supplier’s FOB and CIF prices only provide partial insight. A freight quote can clarify shipping costs under FOB before you commit to either option. ASLG offers FCL and LCL sea freight from China to destinations worldwide.
