Silk Fan Incoterms and Landed Cost FAQ

Data: The U.S. International Trade Administration publishes export and trade resources covering Incoterms, documentation, and the responsibilities that attach to each party in an international sale.

Judgment: Name the Incoterm and the named place on the purchase order itself, because the same term with a different named place moves both cost and risk.

Source: U.S. ITA — International Trade Administration Export Resources (2024)

Data: U.S. CBP importer guidance sets out the responsibility of the importer of record for accurate classification, value, and entry documentation, and the duty owed follows from those declarations.

Judgment: Treat duty as a buyer-side cost that depends on classification, so a landed cost model needs a classification line rather than a percentage of the invoice value.

Source: U.S. CBP — Importer Guidance and Compliance Resources (2024)

Data: ISO standards for trade and logistics documentation describe the data elements that travel with a consignment, which allows cost and risk to be traced between the parties in a shipment.

Judgment: Require the supplier to state which named charges are inside a CIF or DDP price, because a bundled quote without a charge list cannot be compared with a transparent cost stack.

Source: ISO — Standards Catalogue: Trade and Logistics Documentation (2024)

Is FOB or DDP better for a silk fan order?

FOB gives the buyer control and a transparent cost stack, while DDP gives a single delivered price and less administration. FOB usually wins for experienced importers because freight can be quoted competitively and the duty line is visible. DDP suits a first order or a buyer with no customs capability, but the buyer must confirm what the delivered price actually includes, because duties, taxes, and clearance fees vary and an unclear DDP quote hides them.

What is included in the landed cost of silk fans?

The ex-works price plus inland transport to the port, export clearance, freight, insurance, import duties, customs clearance and brokerage, inland delivery to your warehouse, and any inspection or banking fees. Payment fees and the cost of the deposit's working capital are often forgotten. Compare suppliers on landed cost per unit rather than the quoted FOB price, because a lower FOB with expensive freight and duty can be the more costly order.

When does risk transfer from supplier to buyer?

It depends on the Incoterm, and it is the clause buyers misread most. Under FOB, risk transfers when the goods are on board the vessel at the named port. Under CIF, the supplier arranges freight and insurance, but risk still passes at shipment rather than at the destination port. Confirm the named place in the term and insure from the risk-transfer point, not from the arrival date.

Why is CIF often not comparable to FOB?

Because CIF bundles freight and insurance into the supplier's price, and bundled charges hide what is inside them. Ask which forwarder, which transit time, which insurance value, and which risks are covered. A CIF quote becomes comparable only once the named charges are listed. Buyers who compare a CIF price with an FOB price without reconciling the difference are comparing two different scopes of work.

Which contract clauses follow from the chosen term?

Five: the term and the named place, transit-risk cover from the shipment date, a ship-by window with a remedy, a charge schedule listing what is included, and a document list covering the bill of lading, invoice, packing list, and origin proof. The term you choose determines which of these sit with you, so write them into the purchase order rather than leaving them to the invoice.

How do I compare two suppliers with different Incoterms?

Build one worksheet with a row per cost line — quoted price, freight, insurance, duty, clearance, inland delivery, and bank fees — and a column per supplier, then divide the total by the order quantity. Judge every quote on landed cost per unit. Suppliers that look tight on price frequently lose on the total once freight and duty are visible, and a worksheet makes that visible before the order rather than after arrival.