Incoterms Explained: CIF vs EXW or FOB?

Incoterms Explained: CIF vs EXW or FOB?

New Zealand importers shipping costs are primarily influenced by the global supply and demand for space. Shipping Lines are acutely aware of our vulnerability which influences vessel schedules, blank sailing and port omissions. These factors have a direct bearing on sea freight rates. The same can be said of “unscrupulous” freight forwarders in origin countries who often conspire with LCL sea freight consolidators and shippers to maximize forwarders profit and / or shippers cost reduction.

In some Asian markets, freight forwarders and consolidators work together to increase their profits or reduce shipper costs. CIF cargo is often sold to forwarders and consolidators based on a rebate, creating a negative auction where prices drop below cost. To recover losses, consolidators charge the destination agent, who then charges the importer and holds their cargo until paid—these invoices contain significantly inflated unexpected charges. This practice can greatly inflate import costs by hundreds of percentage points, with no legal barriers in many places, including New Zealand.

How to prevent this happening to your cargo?

1. Buy your goods on an Ex Works or FOB basis. Get a quote for the shipping from your NZ forwarder.

2. Chose a forwarder in NZ that represents a combined overseas forwarder / consolidator who controls the container from origin to destination

3. Chose a forwarder in NZ that represents a combined overseas forwarder / consolidator who controls the container from origin to destination