FOB, CIF and DDP for Ingredient Buyers

Trade terms decide where responsibility transfers, and that single fact drives cost, insurance and who deals with customs. Comparing quotations on different terms without normalising them is the most common costing error in ingredient buying.

FOB Shanghai means the price covers everything up to the goods being loaded at origin. You control the ocean or air leg, which suits buyers with their own forwarder relationships and consolidation programmes.

CIF adds freight and insurance to the destination port, which simplifies budgeting but leaves destination charges, duty and clearance with you.

DDP places delivery at your door with duties handled, which is the simplest to receive and usually the least transparent to compare — ask for the freight component to be shown separately when you are benchmarking.

Whatever term you choose, agree it in writing at quotation stage together with the port of destination. A term without a named port is not yet an agreement.