Incoterms with Korean suppliers: FOB Busan and the alternatives
Updated
Three letters in a quotation decide who pays for what, who arranges the shipping, and at exactly which metre of the journey the goods become your problem. Quotes on different terms are not comparable, and comparing them as if they were is one of the commonest costly mistakes in first-time importing.
What an Incoterm settles
Each term answers three questions: who arranges carriage, who pays which costs, and where risk transfers from seller to buyer. That last one is the part people skip, and it is the one that matters when a container is damaged.
| Term | Seller delivers | Buyer typically arranges |
|---|---|---|
| EXW | At their own factory door | Everything, including Korean export clearance |
| FOB | Loaded on the vessel at a Korean port | Sea freight, insurance, import clearance |
| CIF | Freight and insurance paid to your port | Import clearance, duties, inland delivery |
| DDP | At your door, duties paid | Nothing |
Why FOB Busan is the default
Busan handles the overwhelming majority of Korea’s container traffic, and FOB is the conventional quoting basis for Korean exporters. It divides responsibility at a natural seam: the supplier handles everything inside Korea, including export clearance, and you control the ocean leg.
That control is worth more than it appears. On FOB you choose the forwarder, which means you see the real freight cost, you can consolidate with other shipments, and you have a direct relationship with whoever is moving your goods.
Where the hidden costs sit
A CIF quote looks like it covers more, and it does — but the seller chooses the carrier and prices the freight, and you still pay destination charges that are not in the number. FOB plus your own freight quote is usually cheaper and always more transparent.
- Terminal handling at both ends — routinely omitted from comparisons
- Destination charges on CIF — the seller’s forwarder invoices you at arrival
- Duties and import VAT — yours on everything except DDP
- Demurrage — accrues fast if clearance is delayed
Insurance, and the gap on FOB
Under FOB, risk passes when the goods are loaded. Between that moment and arrival, the goods are at your risk and no one has insured them unless you did. CIF includes insurance, but at minimum cover, which is often less than the value of what is in the box.
For any consignment worth insuring, arrange your own marine cover rather than relying on the term. It is inexpensive relative to the goods.
Getting comparable quotes
Ask every supplier for the same term to the same port — FOB Busan is the sensible baseline. Then add your own freight, insurance, duty and destination costs once, and compare landed cost rather than quoted price.
A supplier who cannot quote FOB, or who does not know what their export clearance costs, is telling you they have not exported much. That is not disqualifying, but it should shape your expectations — see whether your supplier is set up to export.
Bear in mind too that the quoted price is only as good as the delivery date behind it, and Korean production stops for longer than the calendar suggests around Seollal and Chuseok.
Ask every shortlisted supplier for FOB Busan, so the numbers compare.
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