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Reading a Quotation: What FOB, CIF and CFR Actually Cover

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Reading a Quotation: What FOB, CIF and CFR Actually Cover

Buyers often line up quotations side by side and pick the lowest number. That works only when every quote covers the same scope, and frequently they do not.

FOB, free on board

The price covers goods, local transport, export clearance and loading onto the vessel. Ocean freight, insurance and everything at the destination are yours. Best when you have your own freight rates.

CFR, cost and freight

Adds ocean freight to the named destination port. Insurance is still your responsibility, and risk still passes at the port of loading, which surprises people.

CIF, cost, insurance and freight

Adds a minimum insurance cover. Check the level of that cover before relying on it, since the default is often lower than buyers assume.

Compare like for like

Ask every supplier to quote on the same Incoterm and the same destination port. Once the scope matches, the remaining gap tells you something real about the goods.

Reading a Quotation: What FOB, CIF and CFR Actually Cover

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