Shipping Cost Calculator — FOB vs CFR

Notes & Assumptions

• FOB: buyer adds freight & insurance. CFR: seller includes freight; buyer adds insurance. Destination fees are always buyer-paid.
• Insurance uses an uplift factor (often 1.10) and is solved exactly to avoid circular references.
• Customs duty is calculated on a CIF basis in many jurisdictions. VAT/GST is applied to (CIF + duty).
• All inputs are in the supplier’s currency; results are shown in your home currency using the FX rate provided.
• “Ex-VAT” totals assume full VAT reclaim. If you can’t reclaim VAT (consumers), use the cash totals.
• Rules vary by country; check your customs authority for the exact valuation base and any fees included in VAT.

Understanding the values in this Shipping Cost (FOB vs CFR) Calculator

This calculator estimates your landed cost by combining the price you were quoted under an Incoterm (FOB or CFR) with insurance, import duty, VAT/GST, destination fees, and currency conversion. It is designed for quick, practical decisions: enter a few numbers and get CIF, Duty, VAT, the Total landed cost, and Per-unit cost in your home currency.

What each input represents

• Incoterm (FOB or CFR): Under FOB, the seller loads the goods at origin; you add ocean freight and insurance. Under CFR, the seller includes ocean freight; you still add insurance and all destination charges.
• Quoted price (at selected term): The invoice amount for the shipment in the supplier’s currency.
• Ocean freight: Required only for FOB. Enter 0 for CFR because freight is already inside the quote.
• Insurance rate % & uplift: Cargo insurance typically covers 110% of value. The calculator solves the insurance circularity exactly using your rate and uplift.
• Duty % and VAT/GST %: Ad-valorem rates used by your customs regime. In many countries, duty is assessed on a CIF basis and VAT/GST on CIF + Duty.
• Destination fees: A lump sum for terminal handling, documentation, and local delivery from port to door.
• Quantity (units): Used to compute per-unit landed costs for buying and pricing decisions.
• FX rate: Converts supplier currency to your home currency; include your bank’s spread if needed.
• VAT reclaimable: Businesses that recover input VAT can view “ex-VAT” totals; consumers should use cash totals.

How the results are derived

The calculator builds a CIF value from (price + freight) and an insurance premium solved exactly with your rate and uplift. It then applies Duty = duty% × CIF and VAT/GST = VAT% × (CIF + Duty). Destination fees are added for cash planning but are excluded from the VAT base in this simple mode. Results are converted using your FX rate and reported as: CIF, Insurance, Duty, VAT, Landed total (cash), Landed total (ex-VAT), and corresponding per-unit figures.

Why the distinctions matter

• FOB vs CFR: CFR may look higher at first glance, but FOB often requires you to add significant freight and insurance. Comparing landed totals ensures an apples-to-apples view.
• Insurance uplift: Insurers commonly require 110% cover; using a flat % on price alone can understate CIF and duty/VAT.
• VAT reclaim: If you reclaim VAT, the ex-VAT total reflects the economic cost; otherwise, plan using the cash total.
• FX risk: A small change in FX can move duty/VAT and the total materially; test a ±1–2% sensitivity.

Common pitfalls to avoid

• Double-counting freight (already baked into CFR quotes).
• Using insurance on price only, not on the insured CIF basis with uplift.
• Applying VAT to destination fees when your local rules may not require it (rules vary).

Informational only — not tax or customs advice. Verify before importing.