The short answer
For most experienced UK importers shipping containerised cargo from China or the Far East, FOB is the better choice. It hands control of the freight leg to you, lets you appoint your own forwarder, and stops the seller padding the freight invoice. CIF can look easier on day one, but you tend to pay for that ease through inflated freight and destination charges.
That said, both have legitimate uses. Below is the long answer — what each term actually means, the cost reality, and the situations where CIF genuinely makes sense.
FOB and CIF — the official definitions
Seller pays: Goods, export packing, inland transport to origin port, export clearance, loading on board the vessel.
Risk transfers: When goods are on board the vessel at the named port of shipment.
Buyer pays: Ocean freight, marine insurance, destination charges, import clearance, duty & VAT, delivery from UK port to door.
Mode: Sea freight only — not used for containerised cargo strictly speaking, but in practice everyone does.
Seller pays: All FOB costs plus the ocean freight to the destination port and minimum cargo insurance (Institute Cargo Clauses C).
Risk transfers: Same as FOB — when goods are on board the vessel at origin. (Note the disconnect: cost transfers at destination, risk transfers at origin.)
Buyer pays: Destination charges, import clearance, duty & VAT, delivery from UK port to door.
Mode: Sea freight only.
Side-by-side responsibility comparison
| Item | FOB | CIF |
|---|---|---|
| Goods & packaging | Seller | Seller |
| Export clearance | Seller | Seller |
| Origin port charges | Seller | Seller |
| Loading on vessel | Seller | Seller |
| Risk on the ocean | Buyer | Buyer |
| Ocean freight | Buyer | Seller |
| Marine insurance | Buyer (optional) | Seller (min ICC C) |
| Destination port charges (THC, doc fee) | Buyer | Buyer |
| Import clearance, duty, VAT | Buyer | Buyer |
| Delivery from UK port to door | Buyer | Buyer |
The real cost reality
The headline difference is that under CIF the seller is paying the freight. So CIF is more expensive to buy, right? Yes — but that's only half the story. The two costs that catch UK importers out are:
- Marked-up ocean freight. The seller's freight rate is rarely passed through at cost. A typical CIF quote includes the seller's margin on the freight — sometimes 10–25% over what you'd pay buying FOB and shipping yourself. On a £1,400 freight rate from Shanghai, that's £140–£350 of hidden margin.
- Destination charges you can't see. Under CIF, the seller's nominated agent in the UK collects "destination charges" from you on arrival — THC, document fees, devanning, port pass, and so on. Because you didn't choose the agent, you have no leverage on these charges. £150–£400 of unexpected bills per container is the norm.
So while CIF looks cleaner on the supplier's commercial invoice, the total landed cost is often higher than buying FOB and arranging your own freight forwarder.
When FOB is the right choice
- You ship regularly from a particular origin and want to lock in a competitive freight rate with your own forwarder
- You want visibility over actual freight costs — useful for cost accounting and customer pricing
- You want control over routing and transit time — particularly important for slow seasonal stock or perishables
- You have a UK forwarder who understands your business and will manage customs, demurrage risk, and exceptions for you
- The supplier is small or new to export — let them just get the goods on the vessel and stop there
- You want to bundle insurance with your existing UK marine cargo policy at better rates
When CIF (genuinely) makes sense
- One-off, small shipments where it's not worth setting up a forwarder relationship
- Letter of credit (LC) transactions — banks often prefer CIF because the document set is simpler (insurance, freight prepaid B/L)
- Commodities and bulk cargo where the seller has scale freight pricing you can't match
- You don't have a UK forwarder and you genuinely just want the goods to arrive at a UK port without you doing anything until then
- Markets where the supplier has a strong logistics arm — large multinational suppliers may genuinely give you a better all-in price
A note on FCA — the modern alternative
Strictly speaking, both FOB and CIF were designed for non-containerised, breakbulk cargo where the seller actually placed the goods physically on the vessel. With containers, that's not what happens — the goods are delivered to the terminal and handed to the carrier, sometimes days before loading.
The ICC's recommended modern alternatives are:
- FCA (Free Carrier) instead of FOB for containers — risk transfers when handed to the first carrier, which actually matches what happens
- CIP (Carriage & Insurance Paid To) instead of CIF — and CIP requires Institute Cargo Clauses (A) cover by default, much better than CIF's minimum ICC (C)
In practice, FOB and CIF remain dominant for sea freight because that's what suppliers and banks know. But if you're setting up a new contract from scratch and want it technically correct, FCA and CIP are the more accurate choices.
Verdict
If you ship regularly from the Far East, ask your supplier to quote FOB and appoint your own UK freight forwarder. Even on a single 20ft container, the cost saving and visibility almost always outweighs the small extra effort.
Use CIF only when the shipment is small, one-off, or wrapped up in an LC transaction — and even then, ask your forwarder to estimate the destination charges in advance so you're not surprised on arrival.
For new contracts on containers, consider FCA or CIP — they're technically better-designed terms for modern container shipping and an experienced supplier will accept them.