FOB vs CIF: Choosing the Right Shipping Term for Your First Order

If you're new to importing, "FOB" and "CIF" can look like alphabet soup. They're actually just answers to one simple question: at what point does responsibility for the shipment pass from seller to buyer?

Under FOB (Free on Board), the seller's job ends once goods are loaded onto the ship at the port of origin. From there, you (or your freight forwarder) arrange and pay for ocean freight, insurance, and everything on the receiving end. This gives you more control, and more responsibility.

Under CIF (Cost, Insurance & Freight), the seller arranges and pays for freight and insurance all the way to your destination port. This is usually the simpler option for a first-time buyer who doesn't yet have an established freight forwarder relationship.

A practical rule of thumb: if you already import regularly and have a freight forwarder you trust, FOB often works out cheaper. If this is your first import or you don't have logistics relationships in place yet, CIF removes a lot of the coordination burden, at a slightly higher price.

Either way, ask your supplier to walk you through the total landed cost under both terms before you decide, a five-minute conversation can save a lot of confusion later.