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What does FOB price mean?

Discussion in 'Suppliers' started by Chris494, Dec 21, 2008.

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  1. Chris494

    Chris494

    Joined:
    Dec 5, 2008
    Messages:
    25
    Hi everyone, ive been Emailing a supplier from China and he has quoted me FOB price, and if i need it, the CIF price. What do these mean? I think ive worked out MOQ (minimum order quantity)? Cheers, Chris.
  2. Pete

    Pete

    Joined:
    May 30, 2005
    Messages:
    14,103
    Re: FOB price?

    FOB literally stands for Free On Board. What it really stands for is the point at which the title to the goods, and therefor the need for protection of what are now your products takes place.

    If it is FOB some town, that means as soon as they turn them loose, the goods are yours. If it is a port, it means that when the goods go on the ship they are yours. It it is "tailgate" it means when their truck backs up to your door they turn them over to you.

    It is also the point you become responsible for transportation costs, insurance if you want it and any port or brokerage and customs fees.

    CIF means they will arrange all of this for you. Cost, Insurance & Freight. It is still your responsibility, but they will handle the details and include in your final payment.

    You actually should have done a search here before psting, this has been discussed many times. If you want more info, do a search here on the forum, or even with google, etc. These are common commercial terms and have been in use for centuries.
    .
  3. darren1979

    darren1979

    Joined:
    Feb 25, 2008
    Messages:
    1,623
    Re: FOB price?

    F.O.B means "Free On Board" meaning they will ship to the port and then you take over and have to get the goods picked up from that port.
    C.I.F means "Cost Insurance and Freight" meaning they will deliver to your door.

    Beat to it by pete, but he explained it better :D
  4. Ives

    Ives

    Joined:
    Feb 19, 2013
    Messages:
    143
    I've just found this old thread by googling, and I still don't understand! The thing I'm looking at says:

    Model Number: WB026A-12MM
    MOQ: 1999 Pieces
    FOB Price: US$ 0.04 - US$ 0.07
    Country of Origin: China (mainland)
    Brand Name: SAL

    So, what exactly does that US$ 0.04 - US$ 0.07 mean?
  5. Pete

    Pete

    Joined:
    May 30, 2005
    Messages:
    14,103
    It means the FOB price, or basically the price without shipping can run from $0.04 to $0.07. The 3 cent spread may have to do with quantity, options, whatever. When you see a listing like that "FOB Price" means "plus shipping". As far as the 3 cent variation, you need to contact them.
    Ives likes this.
  6. uniqbuy

    uniqbuy

    Joined:
    Feb 3, 2011
    Messages:
    256
    Be careful with FOB - some suppliers take it to mean ex-works. Makes little difference if shipping by Air but makes a huge difference if shipping by sea.
  7. Ives

    Ives

    Joined:
    Feb 19, 2013
    Messages:
    143
    What does ex-works mean?
  8. uniqbuy

    uniqbuy

    Joined:
    Feb 3, 2011
    Messages:
    256
    Means that the factory makes it available to you to collect and you have to sort out the rest. I have found it to be more common than FOB at least for smaller items like electronics.
  9. Import Expert

    Import Expert

    Joined:
    Oct 6, 2011
    Messages:
    2,908
    Hi Ives,

    With FOB prices quoted as per your example it means from a financial perspective that the supplier will essentially pay all of the costs up to loading on vessel (this is where the 'Free On Board' derives from. As Pete has mentioned above once goods are delivered to the Port/Depot this is where you are liable for any losses/damage to the goods.

    Assuming you are buying sufficient quantities for commercial sea/air freight then you should contact a UK based freight forwarder (Such as ourselves) to wuote you shipping from FOB China Port (Usuallly the nearest main one to the supplier), to Door UK.

    On top of that you will then only have three additional costs - Insurance (which is obviously optional) and Duty/VAT. You then have all the costs.

    All the best,
    Darren.
  10. Power Forwarding

    Power Forwarding

    Joined:
    Jun 13, 2011
    Messages:
    488
    Sorry but not quite, FOB means the supplier will cover getting it to their closest port at origin, you will then be responsible for the freight and UK side of things.

    CIF means they will cover getting it to your closest port where you'll have to pay the UK charges which are usually very expensive under this method (it's certainly not to door). DAP is the terms where the supplier covers the fees to your door.

    There is more to the terms but that's a very basic explanation and everyone else has explained plenty already but if you need a rate for the shipping then please do let me know and I can get you a rate to door.
  11. amar7

    amar7

    Joined:
    Jun 8, 2014
    Messages:
    22
    Sample orders are usually processed DAP then, right? And why wouldn't they always offer DAP I wonder?

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