EXW, FOB and CIF Car Shipping: Costs and Responsibilities
For this FOB vs CIF example, $950 freight and $125 insurance bring the $12,000 FOB offer to $13,075 at the same destination port. That is $125 below the $13,200 CIF offer. These are illustrative figures; the comparison still needs the actual route, insurance cover and destination charges.
Which quote works out cheaper?
Assume both offers cover the same vehicle, currency, sailing and destination port. For this illustrative calculation, destination charges, tax estimates and onward delivery are equal. Ask your broker for those figures on each actual offer.
| Cost to the same delivery point | Offer A · FOB | Offer B · CIF |
|---|---|---|
| Supplier quote | $12,000 | $13,200 |
| Sea freight | $950 | Included |
| Cargo insurance | $125 | Included, check the cover |
| Subtotal at destination port | $13,075 | $13,200 |
| Terminal and broker charges | $650 | $650 |
| Duties and taxes, illustrative | $1,350 | $1,350 |
| Delivery from the terminal | $300 | $300 |
| Total to the same delivery point | $15,375 | $15,500 |
- The CIF price is $1,200 above FOB. That is the break-even amount for separately purchased freight and insurance, assuming the other charges and coverage match.
- If your forwarder cannot match the route or your policy excludes the damage you want covered, price the difference before using the $125 saving.
Who pays, and when does risk pass?
| Question | FOB | CIF |
|---|---|---|
| Which port do you name? | Port of shipment. | Port of destination. Identify the port of shipment as well. |
| Who arranges main carriage? | Buyer. | Seller arranges and pays freight to the named destination port. |
| Who obtains cargo insurance? | The term does not oblige either party to insure. The buyer can arrange cover. | Seller obtains the default minimum cover, Institute Cargo Clauses (C) or similar, unless different cover is agreed. |
| When does transit risk pass? | When the vehicle is on board the vessel at the port of shipment. | Also when it is on board at the port of shipment, even though the seller pays carriage farther. |
| Who handles import clearance and tax? | Buyer under the standard rule. | Buyer under the standard rule. CIF stops short of door delivery. |
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When the container goes to a terminal first
The named port and the actual handover point need to describe the same transaction. FOB shipping places delivery on board the vessel at the shipment port. Where a container is handed to a carrier at a terminal before vessel loading, discuss FCA for buyer-arranged carriage or CIP for seller-arranged carriage and insurance. Put the selected rule, precise place and Incoterms 2020 edition in the delivery terms.
CIF shipping pays freight charges to the named destination port while risk transfer occurs at the shipment port under the standard rule. Review the marine cargo insurance evidence separately: the insured journey, exclusions, deductible and claims contact. The quote should also identify export clearance, unloading charges and the import clearance costs left to the buyer.
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EXW vs FOB: what happens before the car reaches the ship?
An EXW vehicle price starts at the named premises. Ask your forwarder to price collection, loading, inland movement and the export work left to your side. An apparently cheaper showroom price can leave several unpriced steps before shipment. Confirm who can perform those steps for this order.
FOB names a port of shipment and places delivery on board the vessel. It is a sea or inland-waterway rule. For a container handed to a carrier at a yard or terminal, ask whether FCA describes the actual handover more accurately. Write the rule, named point and “Incoterms® 2020” together.
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Ask for the freight and insurance behind a CIF price
Send the seller the destination port you actually intend to use. Request the carrier or forwarding arrangement, routing assumptions, quote expiry and the charges payable on arrival. A CIF offer to one port cannot be compared with FOB plus freight to a different port without adding the remaining journey.
Keep the insurance evidence with the quote. Check the insured value, covered journey, deductible, exclusions and the person who handles a claim. If you need wider cover, obtain its price before accepting the offer. The party paying freight and the point where risk transfers are separate parts of the comparison.
Questions about EXW, FOB and CIF car quotes
Does CIF include car import duty and registration?
Under the standard CIF allocation, the buyer handles import clearance and its costs. Ask for a separate destination estimate covering duties, taxes, terminal release, local delivery and registration where required. A seller’s extra service should be listed explicitly.
Is FOB always cheaper than CIF?
No. Compare freight, insurance and handling for the same route and vehicle list. The worked example above shows one comparison, not a current shipping rate. A buyer with a different forwarder or insurance requirement can reach a different result.
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