Key points
- Under FOB, delivery is complete when the goods are on board the buyer’s nominated vessel at the loading port in China, and from that moment risk transfers to you; ocean freight is your responsibility, insurance may be arranged by you as needed, and destination charges and import duties are confirmed separately.
- Landed cost is estimated in this order: FOB price, ocean freight, insurance, import duties, and destination and inland charges; the customs value basis and duty rates vary by destination country and tariff code.
- Shipment method depends on equipment size, weight and route: small equipment can ship in containers; large equipment is usually shipped on flat rack, ro-ro vessel or breakbulk.
- In your inquiry state model, configuration, quantity, destination port and Incoterm; a copyable inquiry template is provided below.
What FOB really includes
According to the ICC’s Incoterms® 2020, FOB (free on board) means the seller delivers when the goods are on board the ship named by the buyer at the agreed loading port; at that moment risk of loss or damage transfers to the buyer. The seller handles export formalities; main carriage and import formalities are for the buyer. Under FOB, Incoterms® 2020 do not require either party to insure the goods, but because risk passes to the buyer when the goods are on board, the buyer usually arranges insurance.
The ICC also notes two points. First, FOB applies only to sea or inland waterway transport, i.e., port-to-port; if cargo is in a container and is handed to the carrier at the terminal, FCA often better reflects the actual handover. Second, if the seller has the goods ready at the loading port on the agreed date but the buyer does not timely nominate a vessel, or the vessel is late or closes earlier than expected, the risks and costs pass to the buyer even if the goods have not actually been loaded.
| Rule | Where the seller delivers | Main carriage | Insurance obligation | Mode of transport |
|---|---|---|---|---|
| FCA | Delivered to the carrier nominated by you at the agreed place, such as the factory or the terminal. | Buyer | No obligation to insure; you assume the risk from delivery. | Any mode, including container and multimodal. |
| FOB | When the goods are on board the ship at the port of shipment. | Buyer | No obligation to insure; you assume the risk once the cargo is on board. | Sea or inland waterway transport only. |
| CFR | When the goods are on board the ship at the port of shipment. | Seller | No obligation to insure; you assume the risk once the cargo is on board. | Sea or inland waterway transport only. |
| CIF | When the goods are on board the ship at the port of shipment. | Seller | Seller, with minimum cover (Clauses C). | Sea or inland waterway transport only. |
Note that under CFR and CIF the seller pays the sea freight to the destination port, but risk transfers when the goods are loaded at the port of shipment. The ICC clarifies that CIF only obliges the seller to obtain minimum cover; if you need broader protection, agree it in the contract or arrange additional insurance yourself.
From FOB price to landed cost
FOB price is only the starting point. Before the equipment reaches your site you will normally incur ocean freight, insurance, destination port charges, import duties and taxes, and inland transport. The tax base and duty rate depend on the destination country and tariff heading; for example, Chile generally applies an ad valorem duty on CIF value (goods, freight and insurance).
| Step | Item | Who normally confirms it |
|---|---|---|
| 1 | Equipment FOB price (loading port in China) | Supplier's written quotation |
| 2 | Ocean freight and surcharges | Freight forwarder or carrier appointed by you |
| 3 | Cargo transit insurance | The buyer or its insurer |
| 4 | Import duties, VAT and other import taxes | Destination customs and customs broker |
| 5 | Destination port terminal charges, customs clearance services and inland transport | The local customs broker and carrier |
For example, Chilean Customs indicates that, in general, imports pay an ad valorem duty of 6% on the CIF value and a 19% VAT on the CIF value plus that duty; goods originating in countries with a trade agreement with Chile may be exempt or subject to reduced duties. In Peru, the ad valorem duty is applied to the customs value at rates of 0%, 4%, 6% or 11% depending on the tariff subheading; the IGV (16%) is calculated on the customs value plus duties and other taxes affecting the import, and the IPM (2%) is calculated on that same base, excluding the IGV. Rates and rules can change; always confirm with customs or your customs broker.
Free trade agreements can also affect taxes and duties. China has FTAs in force with Chile (effective 2006), Peru (effective 2010), Costa Rica (effective 2011), Nicaragua (effective 2024-1) and Ecuador (effective 2024-5). To apply the preferential rate you usually must meet the rules of origin and provide the corresponding certificate of origin; if you need it, mention this in your inquiry and confirm the conditions with your customs broker.
How machinery is normally shipped
The shipping method mainly depends on the equipment’s dimensions and weight, whether it can be driven onto the vessel, and the route and destination port. These are the usual options; the specific solution is defined with the freight forwarder once the equipment and port are confirmed.
| Mode | Suitable equipment | What to consider |
|---|---|---|
| 40' High Cube container | Mini excavators, skid steer loaders and other small equipment; some require removing the bucket or attachments | According to Hapag-Lloyd, a 40 ft high-cube container door opening is about 2.34 m wide and 2.60 m high, and the maximum payload is around 28.6 t; confirm with the container you book. |
| Flat rack | Equipment too wide or tall for a standard container | Requires lifting and lashing; out-of-gauge dimensions may incur surcharges |
| Ro-ro vessel | Excavators, loaders and other equipment that can be driven or towed onto the vessel | Depends on whether the route and destination port provide ro-ro service. |
| Breakbulk (breakbulk) | Large or overweight equipment | The port must have adequate lifting capacity. |
Before shipping, confirm the transport dimensions (length, width, height), the shipping weight, which parts will be removed, how they will be protected and how they will be lashed. These details directly affect the ocean freight quote.
A copy-ready inquiry you can use
The template follows the order needed for a quotation. Copy it, fill it out and send by WhatsApp or email; if you are unsure about an item, leave it blank or write "please recommend."
Inquiry template
- Equipment and modele.g., 20 t tracked excavator, CAT 320D or equivalent
- New or usedIf used, acceptable minimum year and maximum operating hours
- Quantity
- Use and conditionse.g., quarry loading at 2800 m altitude
- Configuration or implementse.g., hammer hydraulic line, rock bucket
- Destination country and destination porte.g., Peru, Port of Callao
- IncotermFOB a Chinese port, or CFR to destination port
- Budget and planned purchase date
- Documents you neede.g., current photos and videos, nameplate, configuration sheet
When you receive the quote, check the following items one by one:
- Exact model, configuration and quantity in the quote; for used equipment, the serial number.
- Currency, unit price and total price, and the quote’s validity period.
- Incoterm and named place, for example "FOB Shanghai, Incoterms® 2020".
- What the price includes and excludes: export packing, lashing, export customs clearance and inland transport to the loading port.
- Estimated preparation time and shipping arrangements.
- Payment method and receiving bank account; verify account details through an independent, known channel before you pay.
- Documents the contract provides to deliver, such as commercial invoice, packing list, bill of lading, and, if applicable, certificate of origin.
Compare options using the same conditions
If you compare multiple models or suppliers, put them in the same table: same Incoterm, same loading or destination port, same configuration. Comparing only the total often hides differences in configuration, condition and scope of costs.
The port lines on the site map are only an illustration for inquiries: they indicate destinations you can discuss, not past shipments, fixed routes or uniform delivery times.
Frequently Asked Questions
Is the FOB price on the website the final price?
No. The site amount is a reference FOB for an initial budget screening. The final price is the written offer for the specific equipment, configuration, loading port and validity period.
Can you quote CFR or CIF to our port?
You can request it in the inquiry and specify the destination port. With CFR and CIF the seller arranges sea freight to the destination, but risk transfers when the goods are loaded at the Chinese loading port; CIF includes only minimal insurance coverage.
For container cargo, is FOB or FCA preferable?
The ICC notes containerized cargo is usually delivered to the carrier at the terminal yard, so FCA often better matches the actual handover. The Incoterm can be confirmed when preparing the offer.
How are import duties calculated?
It depends on the country and the tariff code. Taxable base and rates are determined by the destination country and the tariff heading. For example, Chile generally levies an ad valorem duty on the CIF value. Confirm the customs value and the applicable rate with the destination customs authority or your customs broker.
Sources consulted
- ICC Academy: key differences between FCA and FOB (in English)ICC Academy
- ICC Academy: key differences between CIF and CIP (in English)ICC Academy
- Customs Service of Chile: What taxes do I pay when importing? (in Spanish)Servicio Nacional de Aduanas
- Government of Peru: Understanding import taxes and duties (in Spanish)gob.pe · SUNAT
- Ministry of Commerce of China: China–Ecuador Free Trade Area (in Chinese)MOFCOM
- AS/COA: China’s free trade agreements in Latin America (in English)AS/COA
- Hapag‑Lloyd: 40' High Cube container specifications (in English)Hapag-Lloyd
External sources explain general rules; specific taxes, permits and contractual conditions depend on the destination country authority and the written contract.
With the target model and destination port, the next step is to verify the specific equipment and the quotation.
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