Short answer: FOB and CIF are both sea-freight terms under Incoterms 2020, and under both the risk of loss passes to the buyer when the engines are on board the vessel at the Chinese port. What differs is who arranges and pays the ocean carriage and the cargo insurance. FOB leaves both to you. CIF puts them on the seller, priced into a single figure up to a named destination port. Neither term covers import duty, destination port charges or inland delivery.
What does FOB mean for a used engine order?
Under FOB (Free On Board), the seller delivers the engines on board the ship you nominate at the named port and clears export. From the moment the units are on board, the risk is yours: you book the carrier, pay the ocean freight, arrange insurance, and handle import clearance and delivery.
For wholesale buyers, FOB keeps the freight decision visible. The engine price, the inland movement in China and the ocean freight appear as separate lines instead of one blended figure, so you can compare suppliers on the goods alone and use your own forwarder or your own rates.
What does CIF mean, and what does it not mean?
Under CIF (Cost, Insurance and Freight), the seller arranges and pays the carriage to the named destination port and obtains cargo insurance. What CIF does not do is move the risk to the destination. Risk still passes when the goods are on board at origin. CIF adds an obligation on the seller to book and pay; it is not a promise that the cargo arrives.
The insurance side is often misread as well. Incoterms 2020 requires cover of at least 110% of the contract value, normally under Institute Cargo Clauses (C) or a similar set. Clause (C) covers a narrower list of risks than clause (A). If you rely on the seller’s policy, ask which clauses it uses and whether the cover matches the value of your batch.
When FCA or CIP fits better than FOB or CIF
FOB and CIF were written for goods handed over on board a ship. A container of engines is normally handed over at a terminal, not lifted straight onto the vessel, and that difference matters. For containerised cargo the ICC’s Incoterms 2020 guidance points to FCA as the more suitable term, with CIP as the multimodal counterpart of CIF.
FCA (Free Carrier). The seller delivers the goods, cleared for export, to the carrier you nominate at a named place — typically the container terminal or the seller’s premises. Risk passes at that handover, not on board. Compared with FOB this matches how a container actually moves, and it forces the delivery point to be written down.
CIP (Carriage and Insurance Paid To). The seller contracts and pays carriage to a named destination and obtains insurance; risk passes when the goods are handed to the first carrier, not at the destination. CIP applies to any mode of transport, so it fits container and multimodal routes where CIF’s sea-only scope does not. Under Incoterms 2020 the default insurance for CIP is Institute Cargo Clauses (A); for CIF it remains (C). If the cover matters to you, check which clauses the policy actually uses.
In practice many used-engine buyers still ask for FOB or CIF because the trade has used those terms for years. That is a commercial habit, not a rule. What has to be in the contract is the term, its version, and either the named port or the named place of delivery.
FOB and CIF side by side
| Responsibility | FOB | CIF |
|---|---|---|
| Who books the ocean carriage | Buyer | Seller |
| Who pays the ocean freight | Buyer, as a separate line | Seller, built into the price |
| Who arranges cargo insurance | Buyer | Seller, minimum 110% of contract value |
| Where risk passes | On board at the origin port | On board at the origin port |
| Export clearance | Seller | Seller |
| Import clearance and duty | Buyer | Buyer |
| Destination port charges | Confirmed per booking; not automatically excluded | Confirmed per booking; some rates are quoted with terminal handling prepaid |
| Usually chosen when | You have a forwarder or your own rates | You want one figure to your port |
What neither term includes
Buyers sometimes read CIF as “delivered”. It is not. Under both FOB and CIF the following normally sit outside the quoted figure:
- Import duty, VAT and other taxes charged at destination;
- Terminal handling, documentation and release fees at the destination port, unless the freight contract already includes them — some rates are quoted with origin or destination handling prepaid, so ask what the booking covers;
- Demurrage or detention if the container is not collected in time;
- Customs clearance and any conformity inspection required by your authority;
- Inland transport from the destination port to your warehouse, and unloading there.
Ask for a landed cost estimate that lists these separately. A CIF figure that stops at the port and a delivered price that includes them are not comparable, even when the headline numbers look close.
How to compare two offers on the same basis
- Check the term and its version: FOB or CIF, Incoterms 2020, and the exact named port.
- Check what is inside “packing”: individually wrapped, boxed or palletised, and whether loading into the container is included.
- Check the accessory scope: gearbox, ECU, wiring and ancillaries in or out.
- Check the insurance line: amount, clauses, and who is named as beneficiary.
- Check the validity of the quotation and whether it reserves stock.
What to send so the quote is comparable
Whether you ask for FOB or CIF, the reply can only be compared if the request is specific. Include:
- Engine codes with suffixes and quantities, one line per configuration;
- Transmission and drivetrain where it changes the unit, and whether a gearbox is required;
- Accessories expected with each engine, and anything you will reuse from the old unit;
- The named port, or at least the destination country, so freight can be scoped;
- Whether you want FOB, CIF, or both figures for the same batch.
A request written this way returns two quotations you can compare line by line instead of two totals that hide different scopes.
How LSVANT quotes a batch
Our listed prices start from US$300 per engine, FOB Guangzhou. CIF quotations are available on request once the destination port, the unit list and the packing plan are known, because freight depends on the actual engines, the quantity and the packed volume. We do not publish a freight rate: it changes with the sailing, the container type and the booking.
We quote the units we have checked and described, and the quotation states the scope it covers. If you need delivery beyond the destination port, that is a different arrangement and has to be agreed in writing before the order.
Buyer questions
Is CIF safer than FOB?
They allocate different tasks, not different levels of safety. Under both, risk passes when the goods are on board. CIF saves you the booking work; it does not shift the transit risk to the seller.
Can I use my own forwarder on a CIF order?
Under CIF the seller contracts the carriage, so your forwarder normally takes over at the destination port. If you want to control the ocean leg yourself, FOB is the appropriate term.
Does FOB include loading into the container?
FOB covers delivery on board the vessel, which includes the loading operation at the port of shipment. Packing and the inland movement to the port have to be stated in the quotation, because suppliers scope them differently.
Who pays the destination port charges?
This is not automatic. The destination charges follow the freight contract, and the contract differs by booking. Some rates include terminal handling at origin or destination, others leave it to be collected from the consignee. Ask the seller to state, in the quotation, which destination charges the booked freight already covers and which ones you will be billed for.
Which term should a first wholesale order use?
It depends on whether you already have freight rates you trust. Buyers with an established forwarder usually prefer FOB; buyers without one often ask for CIF so that a single figure reaches their port. Either way, compare the engine and packing scope first and the freight second.
Related purchasing resources
Packing and shipping questions · How to buy used engines from China · What we check before shipment · How to compare wholesale quotations · Container order checklist
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Incoterms is a registered trademark of the International Chamber of Commerce. The terms described here follow Incoterms 2020; confirm the version named in your contract before it is signed.