Two suppliers quote you the same stroller: one says "$18.50 FOB Shanghai", the other says "$21.00 CIF Alexandria". Which is cheaper? The answer depends on freight, insurance and where you take responsibility. Understanding incoterms is the difference between a profitable deal and a surprise bill.
The Incoterms You Will Meet Most Often
| Incoterm | Seller responsibility | Buyer responsibility |
|---|---|---|
| EXW | Goods ready at factory | Everything after: pickup, export, freight, insurance, import |
| FOB | Goods loaded onto the vessel at the named port | Sea freight, insurance, import duties |
| CFR | Goods + sea freight to destination port | Insurance (optional but recommended), import duties |
| CIF | Goods + sea freight + insurance to destination port | Import duties, clearance and inland delivery |
| DDP | Everything including delivery to your door and import duties | Almost nothing — receive the goods |
Which One Should You Choose?
FOB — the most common for first-time importers
Most Chinese suppliers quote FOB, and it is a fair, transparent basis. You pay the factory price plus your own freight and insurance, so you control the logistics cost. Just remember to budget freight, insurance, and destination charges separately.
CIF / CFR — convenient, but compare carefully
The supplier arranges freight (and insurance for CIF), which can save you coordination effort. However, the freight portion in a CIF price is sometimes marked up. Always ask the supplier to break the price into goods + freight + insurance so you can compare fairly with FOB quotes.
DDP — the "all-in" option
For buyers who are new to importing, DDP is attractive because the total cost is fixed and the supplier handles customs clearance and delivery to your door. It is ideal for smaller shipments and markets where you do not yet have a customs broker. The trade-off: the price includes more service and risk, so it is higher than FOB. Ask for a detailed breakdown of duties and delivery fees.
How to Compare Quotations Fairly
- Get every quotation on the same incoterm (e.g. all FOB) or ask for a full cost breakdown
- Compare on total landed cost: goods + freight + insurance + duties + port charges
- Check what is not included: bank transfer fees, inspection fees, terminal handling
- For DDP, confirm the destination city — inland delivery can be expensive
Risk and Responsibility: Who Pays if Something Goes Wrong?
- Goods damaged in transit? Under FOB, the buyer's insurance covers it; under CIF, the seller's insurance covers it (but claim limits may be lower).
- Goods delayed at the port? Under EXW/FOB, the buyer coordinates; under DDP, the seller solves it.
- Import duties change? Under DDP, the seller absorbs the difference; under FOB/CIF, the buyer pays.
Payment Terms That Go Together with Incoterms
For baby product orders, the standard terms are 30% deposit, 70% balance before shipment (T/T). For larger or repeat orders, L/C at sight is common. Never pay 100% in advance to an unverified supplier, and always confirm the incoterm, port and delivery date in writing.
A Practical Example
You order 600 strollers at $18.50 FOB Shanghai. Your freight to Alexandria is about $1.80/unit, insurance $0.20/unit, and your clearance and inland costs $1.50/unit — a landed cost of about $22.00/unit. If another supplier quotes $21.00 CIF Alexandria, the two offers are actually very close. Ask for the breakdown and you will know exactly where your money goes.
At Andbaby we quote transparently on any incoterm you prefer — FOB, CFR, CIF or DDP — with an itemized breakdown so you always know your real landed cost.
Alvin
yuan
Lily