Incoterms in 90 Seconds
Incoterms (International Commercial Terms) are the standard rules defining who pays for and is responsible for which part of a shipment. The two you'll see most in China auto export are:
- FOB (Free On Board) — seller delivers to the ship at China port; buyer takes responsibility from there
- CIF (Cost, Insurance, Freight) — seller delivers, insures, and ships to destination port; buyer takes over only at destination
What's Included Where
| Cost item | FOB | CIF |
|---|---|---|
| Vehicle price | ✓ | ✓ |
| China inland transport to port | ✓ | ✓ |
| China export customs | ✓ | ✓ |
| Inspection (SGS/BV) | Usually buyer | Usually included |
| Marine insurance | Buyer | ✓ |
| Ocean freight | Buyer | ✓ |
| Destination port handling | Buyer | Buyer |
| Destination customs duty | Buyer | Buyer |
| Destination inland delivery | Buyer | Buyer |
When to Choose FOB
FOB makes sense when:
- You have a dedicated freight forwarder at destination with better rates than the seller's quote
- You're consolidating multiple cargos and want full control over scheduling
- You're sophisticated enough to handle marine insurance and port logistics
If your annual import volume is < 50 vehicles, FOB usually costs you more than it saves.
When to Choose CIF
CIF makes sense when:
- You're starting in this trade — fewer moving pieces to manage
- You want predictable landed cost at port
- You don't have a freight forwarder you trust
- You want the seller to be motivated to deliver in good condition (since they're responsible until destination)
For 90% of buyers, Starvia recommends CIF.
The Hidden Cost Trap
A "cheap" FOB quote can become an expensive CIF in disguise. Watch for:
- Freight rates spike. Ocean container rates in 2026 are 2x 2019 levels and volatile. Your freight forwarder's quote on day-1 may be 20% higher on day-30 when shipping actually books.
- Marine insurance gotchas. Standard cargo insurance covers physical damage, but excludes "delay" or "consequential loss." Read the fine print.
- Hidden surcharges. BAF (Bunker Adjustment Factor), CAF (Currency Adjustment Factor), THC (Terminal Handling Charge) can add 8–15% to base freight.
- Demurrage / detention. Free time at destination port is typically 5–10 days. After that, $30–80 per vehicle per day.
Practical Example: 5 Vehicles, Shanghai → Lagos
Quote A (FOB): $14,500 × 5 = $72,500
- Plus freight quote (your forwarder): $1,200 × 5 = $6,000
- Plus insurance: $80 × 5 = $400
- All-in: $78,900 if no overruns
Quote B (CIF): $16,100 × 5 = $80,500
- All inclusive
- All-in: $80,500 — locked
Quote A looks $1,600 cheaper, but factor in 15% probability of freight overrun (= $900) and 10% chance of demurrage (= $1,500 average), and expected total is $81,300 — actually more expensive than Quote B.
This is why Starvia recommends CIF for first-time and small-volume importers. The slight markup buys you predictability.
Starvia's Approach
We quote CIF as the default. FOB is available on request. Our CIF prices are itemized so you can see exactly what you're paying for:
- Vehicle FOB price
- China inland + export customs
- Marine insurance (1% of CIF value)
- Ocean freight (RoRo or 40HQ, your choice)
- Port loading / lashing
No hidden surcharges. Your CIF quote on day-1 is your CIF quote on day-30.
Request a transparent CIF quote at our contact page.