CIF Vs FOB

[matt_williams]

Morning All,

Please help me with this - first time importer not understanding everything!

I've had a price FOB Shanghai - Southampton from supplier and done a quick quote a freight forwarders website for the shipping cost. Great!

The price includes -
Ocean Freight - Ok
UK THC - What is this?
Documentation - Ok
Clearance Fee - Ok
Deferment Use - What is this?

With all the above I understand when calculating Duty and VAT I include the shipping costs in the calculation and there are no other hidden cost. I can arrange to collect it from the port.

I have also had a price CIF from the supplier. I'm trying to compare CIF to FOB in terms of costs to find out which would work out the cheapest.

Question is, what would I need to add onto the suppliers CIF costs in order to compare the two shipping prices like for like, to the point where I can arrive at the dock and collect the goods? When calculating duty and VAT payable should I include the suppliers shipping cost?

As always, all help greatly appreciated.

 

[GraemeL]

Morning All,

Please help me with this - first time importer not understanding everything!

I've had a price FOB Shanghai - Southampton from supplier and done a quick quote a freight forwarders website for the shipping cost. Great!

The price includes -
Ocean Freight - Ok
UK THC - What is this?
Documentation - Ok
Clearance Fee - Ok
Deferment Use - What is this?

With all the above I understand when calculating Duty and VAT I include the shipping costs in the calculation and there are no other hidden cost. I can arrange to collect it from the port.

I have also had a price CIF from the supplier. I'm trying to compare CIF to FOB in terms of costs to find out which would work out the cheapest.

Question is, what would I need to add onto the suppliers CIF costs in order to compare the two shipping prices like for like, to the point where I can arrive at the dock and collect the goods? When calculating duty and VAT payable should I include the suppliers shipping cost?

As always, all help greatly appreciated.

Hello Matt,

THC - terminal handling cost
Defermemt - the FF will pay the VAT for you at the right time using their deferment account. This is the commission they charge you for doing this.

Are you insuring the freight? If so VAT is payable on Item+freight+ insurance

Don't use CIF. Its not the cost that matters, its the loss of control.

best of luck,

G

 

[James Wang]

That's right, the CIF is not a good option than FOB. you'd better find your reliable freight forwarder to handle the the cargo shipment and custom clearance stuff.

 

[kayenta]

If you buy CIF the Chinese forwarder is working for your supplier not for you. Often they will pay your supplier a 'fee' to handle the shipment & this is then recovered from you in the form of 'non-authentic' costs. This fee can be anything between £30 & £ 500 depending how big the shipment is.If you buy FOB you choose the forwarder and agree the costs before shipping so you are in control. The most important thing as a new importer is a reliable forwarder rather than making a choice on price only.Good service & advice from the forwarder WILL save you money in the long run.
It would be worth getting a couple of quotations from forwarders on the forum & then pick up the phone and talk to them to make sure you are happy to work with them.
If you want to PM me the size & value of the shipment I will be pleased to give you a price based on FOB Shanghai

 

[barringtonfreight]

FOB is the way! It means that you have total control over when your shipment arrives and how much it will cost.

We have agents in Shanghai if you would like a price.

Good luck!

 

[WolfStores]

Don't use CIF. Its not the cost that matters, its the loss of control.

I would normally agree with you but the OP explained that he is a first time importer, so it is not so much about control but also to know what you are doing. If he does not have any previous experience in my opinion CIF is the way to go. You just sit back and wait for your goods to arrive and you let the supplier do all the work for you.
Simply make sure that you pay after you receive the goods. From experience I never make prepayments to China

 

[Import Expert]

Always go FOB - it will work out a lot cheaper. CIF will lead so some unexpected costs which can kill your margin on smaller orders.

A good UK freight forwarder (Not sure if I am allowed so say such as us.?) and others on here should be willing to supply you a price from FOB to delivered Door with no hidden costs, and be willing to show you the ropes so to speak rather than just making a quick buck.

If you have any questions I'm always willing to help.

Kind regards,
Darren.

 

[MOIC]

Best to arrange your own shipping from China.

There are numerous agents and shipping lines to choose from to get the best quotation.

If you require any advice, please PM me.

Wish you luck.

Ron

 

[Maple Sourcing]

I would suggest C&F instead of CIF, for ordinary products, I do not think insurance is necessary, waste of money for small business.

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