Incoterms for Car Importers: FOB, CFR & CIF Explained
Every quote you get for a car from Japan uses one of three shipping terms. Knowing them tells you exactly what’s included, what you still have to pay, and — the part most buyers miss — what will be printed on your bill of lading.
The three terms
| Term | Full name | What’s included |
|---|---|---|
| FOB | Free On Board | The car loaded onto the ship at the Japan port — vehicle + our commission + export costs. No sea freight or insurance. |
| CFR | Cost & Freight (C&F) | FOB plus ocean freight to your port. Insurance not included. |
| CIF | Cost, Insurance & Freight | CFR plus marine insurance — the full cost to your destination port. |
Cost and risk are two different questions
This is the distinction that catches people out, so it is worth stating plainly.
Risk passes at the same point under all three terms: once the car is on board the vessel in Japan, it is yours. FOB, CFR and CIF do not move that line.
Cost is what changes. The terms differ only in who arranges and pays for the onward freight and insurance:
| Ocean freight | Marine insurance | Who books the vessel | |
|---|---|---|---|
| FOB | You | You | You, or your forwarder |
| CFR | Us | You | Us |
| CIF | Us | Us | Us |
So CIF does not make us responsible for the car at sea — it makes us responsible for buying the cover that pays out if something happens to it. Under FOB that cover is yours to arrange, and if you skip it the car crosses the ocean uninsured.
A worked example (JPY)
A ¥1,200,000 hammer price, medium-sized car, to Kenya:
| Line | Amount | Included in |
|---|---|---|
| Hammer price | ¥1,200,000 | FOB · CFR · CIF |
| Commission — 3.5% | ¥42,000 | FOB · CFR · CIF |
| Export Package | ¥65,000 | FOB · CFR · CIF |
| Inspection (Kenya) | ¥35,000 | FOB · CFR · CIF |
| = FOB | ¥1,342,000 | |
| Ocean freight | ¥211,707 | CFR · CIF |
| = CFR | ¥1,553,707 | |
| Marine insurance (0.25% of FOB) | ¥3,355 | CIF |
| = CIF Mombasa | ¥1,557,062 |
The gap between an FOB quote and a CIF quote on this car is ¥215,062 — almost all of it sea freight. That is why comparing two quotes without first checking which term each is in tells you nothing useful.
Import duty and local taxes are charged by your country on top of CIF and are never part of our quote. Note that duty is usually assessed on the CIF value, so the term you choose can change your tax base as well as your invoice.
Use the landed-cost calculator for a live FOB and CIF figure for your own country and vehicle size.
What the term puts on your bill of lading
The term you choose is not just an invoice line — it decides how the freight is marked on the shipping document that releases your car:
- CIF (and CFR) ship
FREIGHT PREPAID— we have already paid the carrier, and nothing is owed at your end for the sea leg. - FOB ships
FREIGHT COLLECT— the carrier collects the freight from you or your forwarder at the destination before releasing the car.
If you are quoted FOB and are not expecting a freight invoice on arrival, that is the surprise. Export documents explains the rest of what appears on a B/L and how an original and a surrendered one differ.
Which term should you ask for?
CIF for most buyers. We handle freight and insurance, the B/L says FREIGHT PREPAID, and you take over at your port with one number already paid. This is the simplest route and what most of our buyers use.
FOB if you have your own forwarder. If you already have a freight contract — or you are consolidating several cars into a container yourself — FOB lets you use it. You take on booking the vessel and arranging insurance.
CFR is the uncommon middle. It mainly makes sense if your own policy already covers goods in transit, so paying twice for insurance would be waste.
See the full cost breakdown in total landed cost, or the shipping page for current sailings and the RoRo-versus-container choice.