Does FOB Price Include Freight, Storage, Taxes, and Customs Duties?

Yuxuan

2026-01-20 14:21:30

The FOB (Free On Board) price is a critical Incoterm in international trade that defines the point at which costs and risks transfer from the seller to the buyer. Understanding what it includes and excludes is essential for accurate cost calculation, especially for significant transactions like automotive imports.

What FOB Price Includes and Excludes

According to Incoterms® 2020, under FOB (named port of shipment), the seller fulfills their obligation when the goods pass the ship's rail at the agreed port. Therefore, the standard FOB price from a supplier includes:

Cost of the goods (vehicle).
All domestic costs to get the goods to the named export port (e.g., factory transport, local documentation).
Export packing costs.
Loading onto the vessel at the shipment port.
Export clearance duties and taxes (in the seller's country).

Critically, the FOB price does NOT include:

International Ocean Freight: From the shipment port to the destination port.
Marine Insurance: For the international voyage (buyer's responsibility under standard FOB).
Destination Port Charges: Unloading, handling, terminal fees.
Import Duties & Taxes: Customs duties, VAT, GST, or other levies in the buyer's country.
Inland Freight & Storage: Transport and storage after the goods arrive at the destination country.

Calculating Total Landed Cost from FOB for Key Regions

Importers in Africa, the Middle East, South America, Central Asia, and Southeast Asia must add significant costs to the FOB price to determine the total landed cost of a vehicle. The table below outlines key considerations for each region.

Region	Typical FOB Base Components	Major Additional Costs for Buyer (Excluded from FOB)	Key Calculation Notes
Africa	Vehicle cost + export clearance in China + trucking to Chinese port (e.g., Shanghai) + loading.	Ocean freight to port (e.g., Durban, Lagos, Mombasa). Insurance. High destination port dues and potential congestion surcharges. Import duty (varies, e.g., ~25% in Kenya). VAT, other local taxes.	Factor in potential demurrage/detention fees at often congested ports. Total tax burden can exceed 50% of CIF value.
Middle East	Vehicle cost + export documentation + all costs to port (e.g., Shanghai, Tianjin).	Freight to port (e.g., Jebel Ali, Dammam). Insurance. Port fees. GCC Unified Customs Duty (typically 5%). Local VAT (e.g., Saudi Arabia 15%).	Ensure GCC certification compliance to avoid extra modification/inspection costs. Customs duty is calculated on CIF value.
South America	Vehicle cost + Chinese export formalities + loading at port.	High transpacific ocean freight (to Santos, Buenos Aires). Insurance. High South American port charges. Very high import tariffs (e.g., Brazil's complex tax can reach >70% of CIF value). Inland freight (vast distances).	Taxes are levied on CIF value (FOB+freight+insurance), making the final duty amount substantial. Precise calculation is critical.
Central Asia	Vehicle cost + transport to Chinese land border/Railway station (e.g., Khorgos) + export clearance.	Rail or road freight from China to destination country. Insurance for overland transit. Customs broker fees in destination. EAEU unified customs duty (~10-15%) + other national taxes.	FOB is less common for landlocked regions; FCA (Free Carrier) is often more appropriate. Clarify the exact point of delivery.
Southeast Asia	Vehicle cost + export costs to Chinese port (e.g., Ningbo, Shenzhen).	Short-sea freight to regional hubs (e.g., Singapore, Port Klang, Bangkok). Insurance. ASEAN port charges. Import duties (varies widely, 0% under some ASEAN trade agreements to >30% in others). Local taxes (e.g., luxury tax, VAT).	Research specific country's trade agreements with China for potential tariff advantages. Consider transshipment costs for inland countries.

Conclusion and Advice

The FOB price is only the starting point of the total landed cost. Importers must diligently calculate all subsequent logistics, insurance, and import duty costs. When dealing with suppliers like Yuxuan Company, always request a clear breakdown of what is included in their FOB quote and consult with a qualified freight forwarder and customs broker in the destination country to obtain accurate estimates for excluded costs.