FOB vs CIF for Tile Importers: What to Ask Before Requesting a Quote

What FOB and CIF actually mean

FOB and CIF are two of the eleven Incoterms® rules published by the International Chamber of Commerce (ICC). The current edition is Incoterms® 2020. ICC has revised the rules roughly once a decade; the next edition is widely expected around 2030 Verify the current Incoterms® edition with ICC before contracting. Until then, write the version into every quote and contract.

Four of the eleven rules are designed only for sea and inland waterway transport: FAS, FOB, CFR and CIF. Tile containers from India travel by sea, so FOB and CIF dominate tile quotations.

FOB — Free On Board

The seller clears the goods for export and delivers them on board the vessel nominated by the buyer at the named port of shipment. From that moment, the risk of loss or damage is yours, and so are the ocean freight, insurance and all destination costs. You (or your forwarder) choose the shipping line and book the space.

CIF — Cost, Insurance and Freight

The seller clears the goods for export, contracts and pays for carriage to the named destination port, and buys cargo insurance for your benefit. The important detail: risk transfers at exactly the same point as FOB, when the goods are on board in India. The seller pays for the voyage; you carry the risk during it.

Where CFR fits

CFR (Cost and Freight) is CIF without the insurance. Many experienced importers use CFR with their own annual cargo policy, which gives them control over cover and claims while the supplier still books the freight.

A named place must be precise, for example “FOB Mundra, Incoterms® 2020” or “CIF Felixstowe, Incoterms® 2020”. Indian tile shipments commonly move through west-coast ports such as Mundra or Kandla (Deendayal) Verify current port options with partner factories and forwarders.

Who pays for what on a tile container

The table shows the usual split for a full container load (FCL) of tiles. Practice varies, especially for terminal charges, so treat it as a checklist rather than a rule.

What a CIF price does not include

A CIF price can look like a “landed” price. It is not. It stops at the ship’s arrival at your port, and several costs usually sit outside it:

• Destination terminal handling and port charges, often billed to the consignee by the carrier or its agent.
• Customs broker fees, import clearance and any inspection or examination charges.
• Import duties, VAT, GST or sales taxes, and any trade-remedy duties that apply to ceramic tiles in your market.
• Detention and demurrage if the container is not collected or returned within the free time.
• Trucking from the port to your warehouse, and unloading labour or forklift hire.
• Insurance above the minimum the seller is obliged to buy.

Ask your customs broker for the duty and tax position before comparing suppliers. Duties depend on your country, tariff classification and origin, and they change Verify duties and any anti-dumping measures for ceramic tiles of Indian origin in your market.

Risk and insurance: the point most buyers miss

Under CIF, the seller must insure the goods at a minimum of 110% of the contract value, under Institute Cargo Clauses (C) or similar. Clauses (C) is a named-perils cover: it responds to major casualties such as fire, stranding, sinking or collision. It generally does not cover breakage from rough handling, which is the most common tile loss Verify cover scope against the actual policy wording.

Because risk passes to you when the container is loaded, you are the party who will claim under that policy. Ask for a copy of the insurance certificate, the clauses, the insured value and the claims agent at destination before shipment, not after damage is found.

Many importers ask for Institute Cargo Clauses (A), an all-risks cover subject to listed exclusions, or rely on their own open cargo policy and buy on CFR or FOB instead. Under FOB, nobody insures the voyage unless you arrange it.

Why ICC suggests FCA, CPT or CIP for containers

FOB and CIF were built for cargo loaded directly over the ship’s side. A container is different: the supplier usually hands it to the carrier at a terminal or inland container depot days before it is loaded on board. Under FOB or CIF, the seller remains at risk during that wait, even though the container is outside their control.

ICC’s guidance is that FCA (Free Carrier), CPT (Carriage Paid To) and CIP (Carriage and Insurance Paid To) often fit containerised goods better, because risk transfers when the container is handed to the carrier. CIP also requires the higher Institute Cargo Clauses (A) level of cover under the 2020 rules.

In practice, much of the tile trade still quotes FOB and CIF, which works if both sides understand where risk sits. For a long-term supply programme, discuss FCA or CPT with your supplier and forwarder.

When FOB makes sense, and when CIF does

FOB tends to suit you if…

• you already work with a freight forwarder who has contract rates from western India;
• you consolidate purchases from several suppliers or ports;
• you want control over the shipping line, routing, transit time and free time at destination;
• you run regular volumes where freight negotiation matters.

CIF (or CFR) tends to suit you if…

• this is a first order or a trial container;
• you have no forwarding relationship at origin;
• you want one port-to-port price to compare suppliers quickly.

Neither is “cheaper” by definition. A supplier’s freight booking may be competitive, or it may carry a margin. The only fair comparison is to convert every quote to the same basis: add your forwarder’s freight and insurance to FOB quotes, and add destination costs to everything.

What Incoterms do not decide

Incoterms® rules allocate delivery, risk, costs and export or import clearance. They do not decide when ownership of the goods passes, how or when you pay, the price itself, product quality, or which law governs a dispute. Those belong in your sales contract and payment terms. A letter of credit, for example, must call for documents consistent with the Incoterm.

Questions to ask before you request a quote

Put these answers next to the product specification in your request. Our guide on how to prepare a tile RFQ shows how, and tile export packing covers what happens to the container before it leaves.