Three letters on a quotation can change your landed cost by hundreds of dollars a ton. FOB, CFR and CIF look similar, and they all end at a port, but they split the cost and the risk in quite different ways. Here is how they work for a spice shipment, and why we only quote one of them.
The short version
All three are Incoterms 2020 rules for sea freight. In all three, the seller loads the goods on board the vessel at the port of shipment, and the risk passes to the buyer at that moment. What changes is who pays for and controls the journey after that.
| FOB | CFR | CIF | |
|---|---|---|---|
| Seller delivers goods on board at origin port | Yes | Yes | Yes |
| Risk passes to buyer | On board at origin | On board at origin | On board at origin |
| Ocean freight booked and paid by | Buyer | Seller | Seller |
| Cargo insurance arranged by | Buyer (if wanted) | Buyer (if wanted) | Seller, minimum cover |
| Buyer chooses the shipping line and forwarder | Yes | No | No |
FOB: Free On Board
With FOB Surabaya, we prepare the goods, truck them to Tanjung Perak, clear export customs and load them on the ship your forwarder has booked. From there, the freight, insurance, destination charges and import clearance are yours.
It sounds like more work for you, and it is a little. In return, you see every cost clearly and you choose who carries your cargo.
CFR: Cost and Freight
Under CFR, the seller books and pays the ocean freight to your port. The quote looks simpler, one number delivered to your harbour. But notice the catch in the table: the risk still passed to you back at the origin port. If something goes wrong at sea, it is your problem, on a ship you did not choose.
CIF: Cost, Insurance and Freight
CIF is CFR plus insurance arranged by the seller. Under Incoterms 2020, the seller only has to buy minimum cover (Institute Cargo Clauses C), unless you agree something better. For food cargo, many buyers find that minimum too thin.
The hidden costs of a “delivered” price
A CFR or CIF price can look attractive, but a few things are worth knowing:
- Destination charges. The seller pays freight, but terminal handling, documentation and delivery order fees at your port are usually still yours. Some carriers set these high when the freight was sold cheaply at origin.
- Freight margin. The seller may add a margin to the freight, and you cannot easily see it.
- Less control. Transit time, routing and the carrier’s reliability are chosen by someone else. For spices, a long transshipment in a hot port is not ideal.
None of this means CFR or CIF is wrong. Plenty of trade runs on them. But you should compare them with your eyes open.
Why we sell FOB Surabaya only
We are a young company and we want our offers to be easy to check. With FOB, our price covers exactly what we control: the spice, its quality, the packing, the export documents and loading. You can compare our number directly with other Surabaya suppliers, and you can get your own freight quotes from forwarders you trust.
There are other reasons too. Freight rates move week to week, and we do not want to build guesses into your price. Many importers already have forwarders and insurance policies with better rates than we could offer. And keeping the line between our job and yours clear avoids arguments later. You can read more about our shipment terms here.
If you have never bought FOB before, do not let that put you off. Any freight forwarder in your country can quote a sea shipment from Surabaya, and we are happy to coordinate with them on cargo ready dates, container type and documents.
A quick checklist for FOB buyers
- Get a freight quote from Surabaya (Tanjung Perak) to your port before you compare offers.
- Add insurance, destination charges and import duty to see the real landed cost.
- Ask your forwarder which container suits the volume. Light spices like cloves and cardamom fill a container by space before weight.
- Agree the cargo ready date with us so your forwarder can book the right vessel.
- Check how much fits in the container you plan to book with our container load guide.
Want to work out a first order together? See our products or get in touch.
