FOB vs CIF for Cashmere B2B: What B2B Buyers Should Specify (And What We Always Recommend)

A cashmere B2B buyer choosing between FOB Tianjin and CIF Rotterdam is deciding three things: who carries the cargo insurance, when the risk transfers from the mill to the buyer, and how much of the inland logistics is written into the contract price.

This guide compares FOB, CIF, and the two hybrid terms that are more common in cashmere than in most other commodities — FCA and DAP — on the four things that actually change the landed cost: insurance scope, the point where risk transfers, the Incoterms 2020 cost split, and the demurrage exposure that shows up 30 days after the container sails. It also covers the moisture-and-heat damage pattern specific to cashmere yarn and knitwear during the Yangtze-to-Europe leg.

The four terms, compared

Term	Risk transfers at	Who buys cargo insurance	Buyer pays ocean freight	Common in cashmere
EXW	Mill gate, Ordos	Buyer arranges	Yes	Rarely — too much risk on buyer
FOB	Loaded on vessel at Tianjin	Buyer	Yes	Very common
CIF	Loaded on vessel at Tianjin	Seller (min coverage)	No	Common
FCA	Loaded at carrier terminal, Tianjin	Buyer	Yes	Growing
DAP	Delivered to buyer door	Seller	No	Growing fastest

The pattern in cashmere sourcing is that FOB dominates repeat orders and CIF or DAP appear on first orders where the buyer wants the mill to carry more of the transit risk.

FOB Tianjin, the default

What it means. The mill delivers the goods loaded on board the vessel at the named port (Tianjin in almost all cashmere shipments). From that point the risk and the cost transfer to the buyer.

What the buyer ends up paying for.

• Ocean freight Tianjin to destination port
• Cargo marine insurance (typically 110-120% of CIF value, or 110% of FOB value plus 10%)
• Terminal handling at the destination port
• Customs clearance and import duties
• Inland delivery from the destination port to the buyer’s warehouse

What the buyer should specify. The port of loading and the port of discharge, in full, with Incoterms 2020 named explicitly. “FOB Tianjin” without “Incoterms 2020” has been the subject of arbitration more than any other term ambiguity.

The cashmere-specific FOB risk. Risk transfers at the vessel rail on the ship. That means a buyer on FOB owns the goods from roughly day 4 of a 35-day transit to Europe. Cashmere yarn packed at 65% RH in a Tianjin warehouse in August and shipped on an August vessel arrives in Rotterdam in September with a container that has cycled through 40°C daytime temperatures on the Yangtze and then sat in a Rotterdam terminal for 10 days before clearance. Moisture damage in cashmere is not visible at loading. It is visible at the customer’s loom or knitting machine, four weeks later, and by then the B/L has been discharged for a month.

This is the single strongest argument for either CIF or specifying a moisture barrier liner on an FOB shipment.

CIF Rotterdam, what actually changes

What it means. Same risk-transfer point as FOB (loaded on board), but the seller buys minimum-coverage cargo insurance and pays ocean freight to the named destination port.

The critical detail most buyers get wrong. CIF obliges the seller to buy insurance at minimum coverage — typically Institute Cargo Clauses (A) or ICC(A), which is the broadest of the ICC clauses but still requires the buyer to notify the seller of “special circumstances” that would need extended cover.

For cashmere, minimum coverage is usually adequate. It covers the named perils (fire, collision, sinking, water damage). What it does not cover is moisture damage from condensation unless it results from one of the named perils. Condensation during transit is a classic ICC exclusion — it requires Extended Cover or a specific warehouse-to-warehouse policy.

What the buyer should specify beyond the port.

1. ICC(A) or a stated equivalent — do not accept “CIF” without the insurance clause named.
2. A moisture-damage cover rider, either as an extension of the ICC policy or by moving to ICC(A) plus a “rust, moisture, and condensation” extension. This is not expensive on a cargo of this value.
3. A survey at loading — the mill’s freight forwarder should commission a survey at the stuffing point, not at the port. This is the only way to establish when moisture damage occurred, and it is what makes an insurance claim succeed.
4. The named vessel and the shipment date — CIF obliges the seller to give notice of these; the buyer should require it in writing before shipment.

FCA Tianjin, the pragmatic middle

What it means. Risk transfers when the goods are handed to the carrier’s terminal at Tianjin, rather than when loaded on board. Ocean freight and insurance are the buyer’s to arrange from that point.

Why it is growing in cashmere. The two practical differences from FOB:

1. Risk transfers earlier (at the terminal, not at the ship rail), which shortens the window where the buyer owns goods that are sitting in a yard.
2. Under FOB, the seller is responsible for export clearance. Under FCA, that transfers to the buyer. This is the detail that catches cashmere buyers out — if they take FCA and do not handle export clearance themselves, the goods sit in the terminal until someone does.

For an experienced buyer with their own forwarder, FCA is better than FOB. For a buyer using the mill’s forwarder, FOB is simpler and the difference is marginal.

DAP, the fastest growing

What it means. The seller delivers the goods to the buyer’s door, ready for unloading, with import clearance already done by the seller.

Why it is growing fastest in cashmere. The most common complaint from European cashmere buyers is not about price — it is about unpredictable import delays, duty surprises, and the administrative burden of customs clearance. DAP moves all of that to the seller, and a mill that is confident enough in its compliance to offer DAP is signalling a level of operational maturity that matters for a first order.

What it costs. DAP prices typically run 6-12% above FOB on the Tianjin-to-Europe lane, mostly because the seller is absorbing the ocean freight margin, the customs broker fee, and the working capital in import duty. That premium is real but it is often cheaper than the interest cost of a delayed shipment on a seller’s production calendar.

The risk DAP does not remove. DAP transfers risk at the buyer’s door, but only if the contract names a specific delivery address and a specific Incoterms rule version. “DAP” alone, without an address, is incomplete.

What we recommend at our mill

Our default for cashmere yarn and knitwear leaving Ordos is FOB Tianjin, Incoterms 2020, with two specifications attached:

1. A moisture barrier liner specified by name, not just “dry container”
2. A loading survey commissioned by the buyer’s forwarder, not by us

For first orders with a buyer we have not shipped to, we offer CIF at cost plus a stated insurance premium, with the ICC clause and any moisture rider named on the document. We do not charge a margin on the freight — the number we quote for CIF is the number the freight forwarder invoices.

For a buyer who has been burned by import delays and wants the door delivery, DAP to a named address in your warehouse city is available and we will state the duty assumption explicitly in the quotation so there is no surprise at the border.

See also

For the payment method that pairs with these terms — and specifically why an L/C is the only mechanism that makes the fiber specification enforceable at the border — see our LC vs TT comparison. For what has to happen at the mill before any of these terms are agreed, see our 12-point factory audit guide. For the quality inspection that has to happen before the documents are presented, see our AQL final inspection guide.