The formula
Difference = CIF price × (1 + d) − (FOB + Freight + Insurance) × (1 + d), d = duty rate
Duty applies to the CIF value under most customs regimes regardless of which party arranged the freight — so both routes are grossed up consistently, and an inflated bundled freight charge is taxed as well as paid. The supplier’s freight markup therefore costs you twice: once in the price, once in the duty on it.
The model excludes what it cannot generalise: destination charges sometimes differ by who books the freight (carrier-nominated forwarders under CIF are notorious for high destination fees), and your time cost of arranging freight is real for a first shipment and near-zero once a forwarder relationship exists. Both belong in a close decision.
How to use this calculator
- 1
Get both quotes from the supplier
Ask for FOB and CIF pricing on the same order — the gap between them is the supplier’s bundled freight-plus-margin figure.
- 2
Quote your own freight and insurance
A forwarder quote for the same route, volume and mode, plus marine insurance (typically 0.3–0.5% of value).
- 3
Apply your duty rate to both
Duty assesses on CIF value either way; the calculator grosses both routes consistently.
- 4
Check destination charges before deciding
CIF shipments with carrier-nominated forwarders can carry inflated destination handling fees — ask what awaits at your port under each option.
What each basis really allocates
Beyond money, the bases allocate control and risk. FOB gives you carrier choice, routing control, real-time visibility through your own forwarder, and ownership of the insurance claim if cargo is damaged — you insured it, you claim directly. CIF leaves routing and carrier choice with the supplier, whose incentive is cheapness, not speed or schedule reliability; and the insurance is theirs, adding a party to any claim.
Risk transfer differs from cost transfer: under CIF, risk typically passes to the buyer at loading even though the supplier paid the freight — a detail many importers discover during a claim. The incoterms Academy guide covers the full allocation matrix; the financial comparison this calculator runs is one input to a decision that is also about control.
When CIF wins anyway
Unbundling is not always the answer. First-time importers without forwarder relationships face real setup effort; tiny shipments fall below the volumes where own-freight pricing beats a supplier’s consolidated rates; and some origins have genuinely efficient supplier logistics whose bundled price is honest. The calculator settles each case with numbers rather than doctrine.
The durable pattern for growing importers: start CIF for simplicity, obtain both quotes each order to watch the bundled margin, and switch to FOB once volume justifies a forwarder relationship — typically when the calculated difference exceeds a few hundred dollars per shipment consistently. Suppliers rarely resent the switch; freight was never their business.
Common use cases
Quote unbundling
Reveal the supplier’s freight markup by comparing their CIF against FOB plus your freight.
Forwarder business case
Quantify what an own-freight relationship would save across a year of shipments.
Duty optimisation checks
See how the duty gross-up amplifies bundled freight costs.
Basis negotiation
Take the unbundled numbers back to the supplier and negotiate either basis honestly.
Automate this with the API
Model a structured payment for the same shipment where eligible.
curl "https://keybs.io/api/v1/tools/escrow?value=20000&deposit_pct=30" \ -H "x-api-key: YOUR_FREE_KEY"Free Tools API docs and key registration
Frequently asked questions
The supplier’s CIF barely exceeds their FOB — is freight really that cheap?
Sometimes — high-volume suppliers on major lanes buy freight extraordinarily well, and a thin CIF-FOB gap can be genuine. Verify with your own forwarder quote: if the supplier’s bundled freight beats what you can buy, CIF is the honest winner. The comparison costs one email each way.
Who insures the cargo, and does it matter?
Under CIF the supplier insures — at minimum cover, in their name, under their policy terms — and you claim through them. Under FOB (with your own insurance) you hold the policy and claim directly. For cargo where damage is plausible, direct claim rights are worth real money and time; minimum-cover CIF insurance often under-protects.
Are destination charges different under CIF?
They can be materially higher. CIF freight booked through carrier-nominated agents sometimes carries inflated destination handling, delivery-order and documentation fees that recoup a cheap headline freight rate at your port. Ask for the destination charge schedule under each option before deciding — it is a known trap.
Does the choice change my duty bill?
The assessment basis is CIF value either way in most regimes, but the number differs: under FOB-plus-own-freight, duty assesses on your actual freight cost; under CIF, on the supplier’s bundled figure. If their bundle is padded, you pay duty on the padding — the calculator’s gross-up makes that visible.
What about FCA, CFR and the other incoterms?
The same unbundling logic applies across the family — each term moves the freight, insurance and risk boundaries slightly. FCA (handover at an inland point) suits containerised cargo better than FOB technically; CFR is CIF without the insurance. The incoterms Academy guide maps them; this calculator’s FOB/CIF comparison covers the decision that moves the most money.
Does the payment corridor interact with the basis choice?
Indirectly: the invoice value differs by basis (CIF invoices are larger), so payment fees and FX margin apply to different amounts, and structured payments (deposit at order, balance against shipping documents) key off documents that differ by term. A KeyBS Pay quote prices the payment leg for whichever invoice value your basis produces.
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