A Shenzhen appliance seller put three quotes for one 40HQ on the table last month: FOB at USD 4,180, CIF at USD 4,560, DDP to a Los Angeles warehouse at USD 7,900. He took CIF, because “the freight and the insurance are already in it”. Four weeks later the destination invoice arrived: USD 1,180 for terminal handling, documentation, chassis, the customs broker’s minimum and the delivery booking. Add it up and CIF cost him USD 5,740 against USD 5,200 for FOB with his own broker.
That is the counter-intuitive part, and it is not a trick of arithmetic. CIF ends at the destination port, not at your warehouse. Everything after the container is discharged is outside the price, and it is precisely the part nobody quotes at the start.
What “freight and insurance included” actually covers
Under CIF the seller pays carriage to the named destination port and marine insurance for the voyage. Cost and risk part company at the ship’s rail at origin: the buyer carries the risk of the ocean leg, and pays for everything that happens after the cargo is discharged — terminal handling, documentation, chassis, the appointment, import clearance, duty and delivery. The seller’s insurance covers the cargo to the destination port; it does not cover inland transit, and it does not cover your demurrage while you wait for a broker to be appointed.
The destination column nobody sends you
| Charge | Usually outside CIF | Who it falls on |
|---|---|---|
| Terminal handling and documentation | yes | buyer |
| Chassis and delivery booking | yes | buyer |
| Customs broker minimum and bond | yes | buyer |
| Duty, fees and additional tariffs | yes | buyer |
| Demurrage and detention | yes | buyer |
None of these are hidden in a dishonest sense. They are simply not in the CIF quote, and a first-time importer does not know to ask. Ask your broker for the destination estimate before you compare the three numbers, not after the container sails.
Landed cost, not freight
The comparison that matters is landed cost: goods plus freight plus insurance plus destination charges plus duty plus delivery, divided by the units in the container. On the case above, CIF landed at about 10% more than FOB with the buyer’s own broker, and DDP landed close to the CIF number once duty and delivery were counted — which is why the DDP quote looked expensive and was not.
This is also where a good customs broker earns its fee: not on the entry itself, but on the estimate you get before you book. A broker who can give you a destination cost sheet in writing is worth more than one who quotes the lowest entry fee and then adds disbursements.
Five things an old operator checks first
- Ask for the destination charges in writing — terminal, documentation, chassis, appointment, delivery — before comparing freight.
- Ask the broker for the per-entry minimum and for the bond cost, not just the entry fee.
- Confirm whether the CIF insurance has a deductible large enough to make a small claim pointless.
- Never compare an FOB number with a DDP number: one ends at the port, the other at the door, and the gap is the part you are deciding about.
- For DDP shipping, ask which importer of record and which bond sit behind the price; that is where a cheap quote stops being cheap.
What to do before the next booking
Send us the cargo, the destination postcode and the trade term you have been quoted, and we will return three numbers side by side — FOB with your own broker, CIF, and DDP to the door — each with the destination column shown, so the decision is made on landed cost rather than on the freight line. For a live shipment, message the operations desk on WhatsApp: +86 135 0963 1114.