Projects and procurement
EXW, FOB, CIF or DDP? Incoterms for Kitchen Buyers
Key points
- Incoterms 2020 define who pays for and carries the risk of each stage of delivery.
- EXW and FOB suit buyers with their own freight forwarder; CIF moves sea freight to the seller; DDP is door-to-door.
- With DDP, UK import duty and VAT are included; with other terms you pay them on arrival (VAT can usually be accounted for through postponed VAT accounting).
- Compare quotations on the same Incoterm, or you are not comparing like with like.
Factory-direct kitchens are cheaper because there is no distributor in the middle. But someone still has to move the goods from the factory to your site or warehouse. Incoterms are the internationally agreed rules (currently Incoterms 2020) that say who does what. These are the four you will see on our quotations.
EXW: Ex works
We pack the goods and make them available at our factory. You (usually through your freight forwarder) arrange collection, export clearance, sea freight, import clearance and delivery. It gives you the most control and usually the lowest quoted price, but you manage everything and carry the risk from the factory gate.
FOB: Free on board
We deliver the goods, export-cleared, onto the vessel at the port of origin. From that point the costs and risk are yours. FOB is popular with buyers who already have a forwarder and good sea-freight rates.
CIF: Cost, insurance and freight
We book and pay the sea freight and insurance to your chosen port in the UK or Ireland. Risk passes to you when the goods are loaded at origin, but you do not have to organise shipping. You handle import clearance, duty and final delivery.
DDP: Delivered duty paid
We deliver to your warehouse or site with import duty and clearance included. It is the simplest option: one price, one supplier, and the goods arrive ready to unload.
Who does what
| Stage | EXW | FOB | CIF | DDP |
|---|---|---|---|---|
| Packing and loading at factory | Sanyang | Sanyang | Sanyang | Sanyang |
| Export clearance | Buyer | Sanyang | Sanyang | Sanyang |
| Sea freight and insurance | Buyer | Buyer | Sanyang | Sanyang |
| Import clearance, duty and VAT | Buyer | Buyer | Buyer | Sanyang |
| Delivery to site | Buyer | Buyer | Buyer | Sanyang |
Duty and tax
Kitchen cabinets are classified as HS 9403 40 (wooden kitchen furniture). Check the current UK Global Tariff rate for your commodity code with your customs broker. Import VAT is charged at 20%; VAT-registered businesses can usually use postponed VAT accounting to avoid paying it upfront at the border.
Choosing the right term
If you import regularly and have a forwarder, EXW or FOB usually gives the best total cost. If this is your first project with us, or you want one fixed delivered price, choose DDP. Whatever you choose, compare quotations from different suppliers on the same Incoterm.
Every Sanyang quotation states its Incoterm, and we can quote more than one so you can compare. See shipping and delivery.
Frequently asked questions
What does EXW mean on a quotation?
Ex works: the seller makes the packed goods available at its factory, and the buyer arranges and pays for everything from there, including export clearance.
What is the difference between FOB and CIF?
With FOB the buyer pays sea freight and insurance from the port of origin. With CIF the seller pays them to the destination port. In both, risk passes to the buyer when the goods are loaded at origin.
About the author. Written by Sanyang's design and technical team, drawing on more than 25 years of manufacturing kitchen and bathroom cabinetry and more than 500 containers a month shipped to the United States. About Sanyang.
