What is FOB and CIF

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and click on FAQs.

For you it's mainly to see that the goods are legal to import, and that the supplier abroad uses the most economical method of shipment because they won't care as long as the goods go out of the door and they get paid.

"Free on board" it means you chose the transport company and arrange to have the goods picked up all at your own expense. There's usually a reference to where the goods will be made available, such as FOB, L' Institut National Français Pour l'affermage des Grenouilles, Paris.

"Cost, Insurance and Freight". Essentially means that the supplier will organise and pay for the freight within the cost of the merchandise. This time, usually with a reference as to where the goods are to be delivered, such CIF English National Frog Trampling Institute, London.

Another one is "DDP" which is "Delivered Duty Paid" the meaning of which is same as CIF but with import duties paid (Note, not usually inc. VAT). Note that if "you" want to recover import VAT (If there is any) then the importation has to be done in "your" name.

Best thing for you to do at this stage is to get some quotes from freight companies in the yellow pages. They'll usually send a rep around who'll explain things. Remember to clarify the issue of insurance.

DG

1) FOB - free on board - your supplier will put the goods on a boat and you pay all costs thereafter:-

ocean freight terminal handling in uk port security charges customs clearance duty VAT on import delivery to your premises from the port

2) CIF - your supplier also pays the ocean freight and insures the goods to a named destination. you pay all costs listed above apart from ocean freight. so the CIF prices will be more expensive than FOB.

Import procedures - you supplier will normally need to provide you with:-

- invoice

- packing list

- certificate of origin

- bill of lading - this is a document which effectively gives title of the goods to you so you can gain custody of them from the shipping line or their agent. you will normally be given these after you have paid for the goods, assuming your supplier has not given you credit.

You will then need a freight forwarder who can clear the goods on your behalf (make a customs entry and pay duty and VAT on your behalf) and organise delivery to you. shop around as you will get a variation in costs - especially on the cost of using your clearing agent's deferment account (they use this to settle VAT and duty to customs and will charge you for the privilege - often a percentage of the amount or a flat fee if you are lucky/ push hard enough).

you may also need to classify your goods to see what rate of duty is payable. although your clearing agent will often do this for you, they will often get it wrong.

goods have a tariff number and you can use this to see what duty is payable at this web site:-

further help on classifying goods can be found here:-

including a helpline 01702 366 077