When dealing with suppliers from China, you’ll be offered 4 types of pricing:
FOB – Free on Board (or Freight on Board). This basically means that the cost of delivering the goods to the nearest port is included but YOU, as the buyer, are responsible for the shipping from there and all other fees associated with getting the goods to your country/address.
EXW (Ex-Works) – also sometimes referred to as the Ex-Factory price. This basically means the cost of the product and nothing else! No shipping costs or export fees in China are included in this price, never mind local port and custom fees or delivery to your door.
CIF – Cost, Insurance and Freight. In this case, the price also includes sea freight charges and insurance to deliver the goods to YOUR nearest port. But only to the port – from that point onwards, you take the shipment into your hands.
CNF – Cost & Freight (or Cost, no Insurance, Freight). Similar to CIF only this time insurance is not included.
If your supplier quoted you a CNF London price, this means that the price includes shipping of the goods via sea freight to London port. When the goods arrive, you’ll have to organise customs clearance and delivery to your home/office/warehouse.
While the CNF price can look very attractive, keep in mind that there will be other costs involved when your goods arrive in London, such as:
Customs clearance fee
Value Added Tax
Port security charge
Warehouse storage fee
So the CNF price is really just the tip of the iceberg and does not show you the true, FINAL price you’ll pay for the products you’re importing.
Also, as you’re new to importing, it will take extra time and be a lot of hassle for you to organise everything at London’s port.
f your supplier quoted you an Ex-Works price, this means that there will be LOTS of hidden charges in China + the actual freight charge + all the additional charges I already covered under CNF. This really is NOT the way to do business! You’ll never know for sure how much your import will cost in total, so please NEVER deal with Ex-Works prices!!!
A much better alternative to CNF, FOB, CIF and Ex-Works is to use a freight forwarding agent for your shipments from China. These companies will take care of EVERYTHING mentioned above and will deliver the goods to your door without you having to mess around with the customs clearance procedure.
You usually receive an invoice from them once your goods have arrived with all taxes, customs & port fees clearly listed.
I highly recommend you use such a company, at least for your first few importing deals. These freight forwarding companies are very affordable and can actually work out cheaper than if you try to do it all on your own.