FOB, EXW, CIF, DDP: what each one includes
EXW means you buy the goods at the factory gate and own every step after that — export clearance, inland trucking, port charges, ocean freight, insurance, duty. It looks cheapest on the invoice and is the most work.
FOB means the factory delivers to the named port and clears export. Ningbo or Shanghai, in our case. You pay ocean freight, insurance, duty and destination charges. This is the default for most of our US and EU buyers because it keeps the freight negotiation in their hands.
CIF bundles freight and insurance into the quotation. Convenient, but you cannot see the freight rate and you cannot shop it. DDP puts everything, including duty and last-mile delivery, on the seller. DDP is popular with marketplace sellers and dangerous for anyone who has not checked whether the seller is declaring the correct customs value.
Whichever term you use, the number that matters is landed cost per unit at your warehouse, not the FOB price. Four of the five lines below never appear on a quotation.
Number one and two: freight and duty
Freight is priced per cubic metre for LCL and per container for FCL. A 40HQ holds roughly 65–68 CBM of usable space; a 20GP holds about 28. Toys cube out before they weigh out, so CBM is the number to model.
Work out cartons per unit early. If a carton holds 24 pieces at 0.07 CBM, then 2,000 pieces is 84 cartons and 5.9 CBM. Multiply that by the freight rate per CBM your forwarder quotes and divide by the unit count — the result is freight per piece. It is a variable, not a constant: the same booking can cost twice as much in a tight month.
LCL is charged on whichever is greater, cubic metres or tonnes. Wooden toys are heavy for their size, so a pallet that cubes at 2 CBM may still weigh close to a tonne. Get both numbers from the factory before you compare forwarder quotes.
Duty sits on the customs value, and the basis differs by market. The EU assesses it on the CIF value, so freight and insurance are dutiable; the US assesses on the transaction value, which generally excludes international freight. Wooden toys classify under HS 9503.00. In the US the MFN rate for 9503.00 is free, but additional tariffs on Chinese-origin goods — Section 301 and the IEEPA measures — can push the effective rate well above that. The EU conventional rate is around 4.7%. Rates change by country and by year, so check the current tariff schedule and any Federal Register notice before you price a programme.
Number three: test amortisation
Compliance is a fixed cost per model, not per unit. A full EN 71-1/2/3 plus ASTM F963 programme, with CPSIA lead and phthalates, costs roughly the same whether you order 300 pieces or 30,000. That is why the test line dominates a small order and almost disappears on a large one.
Two levers reduce it. Group SKUs that share construction, paint and timber, and test the worst-case representative if the laboratory agrees. And reuse reports across markets where the test plan overlaps, rather than commissioning two programmes.
A retest after a paint change is the same cost again. If a buyer asks for a colour change mid-programme, that request carries a compliance line with it.
Number four and five: packaging and QC
Packaging is where quotations and reality diverge most often. A printed colour box, a window patch, a display carton, a poly bag, an instruction sheet in three languages, a barcode sticker — each is a line item, and some are inside the FOB price while others are not. Ask explicitly what packaging the FOB price includes.
Packaging also moves freight. A retail-ready colour box is larger than a plain export carton, and a display carton can add 15–20% to the cube for the same piece count. Run the CBM calculation after the packaging is chosen, not before.
QC and damage are the last line. Budget 1–3% of FOB for the pieces that arrive damaged, mislabelled or short, plus the cost of an inspection if you commission one. Wooden toys are heavy and corners take hits; a carton that is fine at the factory can be crushed after two transhipments.
A worked example in percentages, not prices
Take an order at a mid-range FOB and express every other line as a share of that FOB, set to 100. The absolute numbers change with your product and your freight rate; the shares are what you should argue about.
| Line | Share of FOB at 2,000 pcs | Share of FOB at 10,000 pcs |
|---|---|---|
| FOB price | 100 | 100 |
| Ocean freight | 5.8 | 4.6 |
| Insurance | 0.3 | 0.3 |
| Duty at 4.7% of CIF | 5.0 | 4.9 |
| Tests | 10.0 | 2.0 |
| Packaging upgrade | 4.2 | 4.2 |
| Damage and QC | 1.5 | 1.5 |
| Inland, broker, financing | 2.3 | 2.1 |
| Landed cost | 129.1 | 119.6 |
The multiplier is about 1.29 on a 2,000-piece order and about 1.20 on 10,000 pieces. A 30% gap between the quotation and the real cost is normal for a first order at low volume.
That difference decides your retail price. If you work to a 2.5× markup, a 1.29 multiplier leaves noticeably less margin than a 1.20 — and if your channel cannot carry the higher shelf price, the problem is usually the volume and the packaging, not the factory's quotation.
The formula to keep
Landed unit cost = FOB + ((freight + insurance + duty + port and broker fees) ÷ units) + (test cost ÷ units) + packaging + QC allowance + financing.
Build it as a spreadsheet with inputs rather than fixed numbers, so you can answer the two questions buyers actually ask: what happens at 5,000 pieces, and what happens if the freight rate doubles?
- FOB price and carton pack quantity.
- Carton dimensions and CBM per carton.
- Freight rate per CBM, or per container.
- Duty rate for the destination and the origin.
- Test cost per model and how many models the order covers.
- Packaging cost per unit and the damage allowance.
Next step
Send us the SKU, the quantity and the destination port and we will quote FOB with the carton dimensions and CBM per carton included, so you can drop real inputs into the formula. Look at the vehicles, tracks and ramps range, read about shipping and payment, or request a quote.
