How to Compare FOB Quotations From Bangladeshi Suppliers

Three FOB quotations for the same order can show three different headline prices, and the lowest can still be the most expensive shipment. That happens because an FOB price ends on board the vessel, while the costs that follow it do not end there. FOB means Free On Board. Under Incoterms 2020, the seller delivers the goods loaded on board the vessel nominated by the buyer at the named port of shipment, and risk transfers to the buyer at that point.¹ FOB applies only to sea or inland waterway transport.¹

The comparison method in this guide has four passes. Normalise every quote to the same named port of loading and the same on-board point. Rewrite every quote onto the same on-board cost lines, so a charge one supplier includes and another bills separately stops distorting the ranking. Add the same onward costs to every quote. Rank by landed cost per unit, never by headline FOB price alone. Landed cost is the total expense of a product after it has arrived at its final destination, including product cost, shipping, duties, taxes, insurance, handling, and other charges.²

Why this matters for buyers and sellers

For the buyer, the headline hides the two lines that most often decide the ranking. The first is the load port: a quote loaded at Chattogram and a quote loaded at Mongla start their buyer-paid sea legs from different places, with different freight to the same destination. The second is the on-board cost inclusion: one supplier may include origin terminal handling and loading inside its FOB price, while another bills terminal handling separately, so the two FOB prices do not cover the same work. A buyer who ranks on headline price alone may pick the longer sea leg, or the quote with a charge still to come, and lose the apparent saving before the goods reach the warehouse.

For the seller, the FOB price ends on board, so anything changing the cost of getting the goods on board moves the quote. A seller farther from the load port carries a longer inland leg inside its FOB price; a nearer seller does not. That is a cost difference, not a quality difference. A seller that bills terminal handling separately is not necessarily more expensive than a seller that includes it.

Step-by-step: how it works

Work through the seven steps with one specification sheet in front of you, and do not rank any quote until it has passed through all four passes.

1. Fix one specification. Send the same product, material, size, colour, quantity, packing, marking, and inspection requirement to every supplier in identical words.

2. Write the named port of loading and the on-board point in full. Record the port, the berth or terminal inside it, the vessel name once nominated, and the delivery period. The buyer must inform the seller in time of the vessel name and the loading place and point, and late notice can shift risk and costs to the buyer.¹ A quote naming only a country, or a port with no berth or terminal, goes back before ranking.

3. Split each FOB price into its lines. Ask what it includes: goods, packaging and marking, inland transport to the port, origin terminal handling, loading on board, and export clearance.¹ The seller is responsible for transporting the goods to the port, loading them on board the buyer-nominated vessel, and completing export formalities.¹ If any line sits outside one price and inside another, the two prices do not cover the same work.

4. Normalise the port and the inclusions. Rewrite every quote to the same named port of loading and the same on-board point, and onto the same lines. Where a quote bills terminal handling separately, add it to that quote's total. Where quotes name different load ports, price the sea leg from each port separately, to the same destination.

5. Add the same onward costs. From each on-board point, add main carriage, insurance if arranged, destination handling, duty and taxes from the schedule for the confirmed code, broker fees, and warehouse delivery, all to the same warehouse.² Use one destination, one currency, and one quantity for every quote. Under FOB, neither party is obliged to insure the goods, so state who arranges cover and for what value.³

6. Rank by landed cost per unit, then test the ranking. Divide each total by the same quantity, then change one variable at a time: a later vessel, a different load port, or a higher freight figure. A ranking that flips on a small change is a sign to confirm that line first.

7. Confirm validity, timing, and payment in writing. Record price expiry, ready date, vessel nomination deadline, loading window, payment method and timing, and who bears bank charges. A ranking built on an expired price, or on a vessel that cannot load in the window, is not a ranking.

Costs, timelines and documents

Cost lines in an FOB comparison

Build the total in this order: FOB price, any on-board line billed separately, main carriage, insurance if arranged, destination handling, duty and taxes from the schedule for the confirmed code, broker fees, and warehouse delivery. The FOB price covers the goods, packaging and marking, inland transport to the port, origin terminal handling, loading on board, and export clearance, where the supplier includes each line.¹ Everything after the on-board point is a buyer line, including main carriage and import clearance.¹

The table below uses Example figures only, for 800 cartons of jute shopping bags. Quote 3 bills origin terminal handling separately, so that line is added to its total in the normalisation pass. Duty in each column is an example schedule amount: replace it with the amount from the schedule for your confirmed code, confirmed with a broker.

| Example figures, 800 cartons of jute shopping bags | Quote 1 | Quote 2 | Quote 3 | | FOB price, example figure | $14,800 | $14,200 | $14,500 | | Load port, example figure | Chattogram | Mongla | Chattogram | | Origin terminal handling billed separately, example figure | $0 | $0 | $420 | | Main carriage, example figure | $2,400 | $3,150 | $2,400 | | Insurance, example figure | $220 | $220 | $220 | | Destination handling, example figure | $380 | $380 | $380 | | Duty and taxes, example schedule amount | $740 | $715 | $755 | | Broker fees, example figure | $260 | $260 | $260 | | Total landed cost, example figures | $18,800 | $18,925 | $18,935 | | Landed cost per carton, example figures | $23.50 | $23.66 | $23.67 |

Quote 2 has the lowest FOB price and loses: its longer sea leg from Mongla outweighs the headline saving. Quote 3 looks second cheapest on headline price, but finishes last once its separately billed terminal handling is counted. Quote 1 wins per carton despite a middle FOB price.

Timelines to confirm separately

Ask for separate dates, not one delivery promise: price expiry, production finish, readiness, vessel nomination deadline, loading window, and expected warehouse arrival. If the buyer gives late notice of the vessel, or the nominated vessel is delayed, the buyer can bear the risk and cost of storage at the port until the vessel arrives.¹ Record who bears waiting and storage costs, in writing, before ranking.

Documents to confirm at quotation stage

Ask each supplier which papers it will supply and which you or your forwarder must obtain. Confirm the commercial invoice, packing list, product code for the destination schedule, proof that the goods were loaded on board, and the export clearance papers the seller completes under FOB.¹ The seller must provide, at its own expense, the usual proof of delivery.³ The buyer or the buyer's carrier holds the transport document for the onward leg, since the seller does not contract the carrier under FOB.¹

Bangladesh-specific rules and tips

Bangladesh offers more than one port of shipment, and that choice is a comparison variable, not a detail. A quote loaded at Chattogram and one loaded at Mongla start their buyer-paid legs from different places, with different sea legs to the same destination. Price both sea legs from a forwarder on the same basis, to the same warehouse.

Do not add inland transport to the buyer side of an FOB comparison. Transport to the port sits inside the FOB price, in the seller's lines.¹ Adding it again double-counts it. If a quote separates inland transport, record whether it sits inside or outside the stated FOB price, and rewrite every quote the same way. The same applies to loading: under FOB the seller loads the goods on board, so a loading charge billed to the buyer is a line to normalise, not a line to accept at face value.

Check the cargo form against the rule before you compare. FOB suits goods delivered directly on board the vessel, such as bulk and break-bulk cargo, not containerised cargo, which is normally handed over at a terminal.¹ For containerised goods, the FCA rule fits the handover better.¹ Do not force containerised cartons into an FOB comparison; the on-board point will not match the real handover.

For background on all eleven rules, see the Incoterms for shipments from Bangladesh guide. For what an FOB price includes and where risk passes, see the FOB free on board guide. For the full landed-cost method, see the Landed cost imports from Bangladesh guide.

Mistakes and red flags

Ranking on the FOB price alone. The headline excludes main carriage, insurance, destination handling, duty, and broker fees. Rank only on landed cost per unit, from the same lines for every quote.

Comparing quotes from different load ports as if they were the same. Two ports produce different sea legs and different freight. Normalise the port first, or the ranking measures the port, not the supplier.

Comparing quotes with different on-board inclusions as if they were the same. A price that excludes terminal handling or loading is not cheaper than a price that includes them until the excluded line is added. Rewrite every quote onto the same lines before ranking.

Adding inland transport or loading to the buyer side twice. Both sit inside the FOB price, in the seller's lines.¹ A separated line is a normalisation task, not an extra buyer cost on top of a full FOB price.

Using FOB for containerised cargo. Containers handed over at a terminal are not delivered directly on board in the sense FOB requires.¹ Use the rule that matches the real handover.

Leaving the vessel nomination vague. The buyer must inform the seller in time of the vessel name and the loading place and point.¹ A quote with no vessel, point, or window leaves the risk transfer unclear and the loading window unpriced.

Accepting a duty figure without a code check. Every duty line here is an example schedule amount. Replace it with the amount from the schedule for your confirmed code, confirmed with a broker.

Checklist

• One specification sent to every supplier in identical words, including carton form, packing, marking, and inspection.

• Named port of loading, berth or terminal, vessel name or nomination deadline, and delivery period recorded for every quote.

• FOB price split into goods, packaging and marking, inland transport, origin terminal handling, loading on board, and export clearance.

• Every separately billed on-board line added to that quote's total, so all quotes cover the same work.

• Sea leg priced separately from each load port, to the same destination, on the same forwarder basis.

• Same onward lines for every quote, in one currency, to one warehouse, for one quantity: main carriage, insurance if arranged, destination handling, duty from the schedule for the confirmed code, broker fees, warehouse delivery.

• Validity, ready date, nomination deadline, loading window, payment terms, and bank charges confirmed in writing.

• Documents confirmed: invoice, packing list, product code, proof of on-board delivery, export papers, transport document holder, and any certificate of origin.

• Cargo form checked: FOB only where goods are delivered directly on board the vessel, not for containerised terminal handovers.

How Exportain helps

Exportain lets buyers post one request for quotation that carries the same specification to more than one supplier. State the product, quantity, carton form, packing, and marking once, and ask every supplier for the same lines: named port of loading in full, berth or terminal, split FOB price, any separately billed on-board line, validity, ready date, and payment terms. When replies arrive with different ports or different inclusions, the comparison sheet here rewrites them onto common lines before ranking. Post a free RFQ on Exportain at https://exportain.com/rfqs, and state the FOB port of loading and the on-board point in the request so replies arrive comparable.

FAQs

What should I know first about FOB?

FOB means Free On Board, and it applies only to sea or inland waterway transport.¹ The seller delivers by loading the goods on board the vessel nominated by the buyer at the named port of shipment, completes export formalities, and transfers risk at that point.¹ The buyer contracts the carrier, pays freight, and handles import formalities.¹ No party is obliged to insure the goods under FOB, although the buyer may arrange cover separately.³

What are the typical costs and timelines?

No typical costs or timelines hold for every FOB order, because the load port, cargo form, route, and destination duty schedule all change the total. The structure is stable: FOB price, any separately billed on-board line, main carriage, insurance if arranged, destination handling, duty and taxes from the schedule for the confirmed code, broker fees, and warehouse delivery, giving landed cost per unit.²

Which documents are needed?

Confirm the commercial invoice, packing list, product code for the destination schedule, proof that the goods were loaded on board, and the export clearance papers the seller completes.¹ The seller provides the usual proof of delivery at its own expense.³ The buyer or the buyer's carrier holds the transport document for the onward leg, since the seller does not contract the carrier under FOB.¹

What are the most common mistakes?

Ranking on the FOB price alone, comparing quotes from different load ports without normalising them, comparing quotes with different on-board inclusions without rewriting them onto the same lines, adding inland transport twice, using FOB for containerised cargo, leaving the vessel nomination vague, and accepting a duty figure without a code check. Each mistake changes the landed cost per unit without changing the product, so the comparison sheet, the load port, the inclusions, and the code check come before ranking.

Next steps on Exportain

• How buying works, step by step: https://exportain.com/how-to-buy

• Background on all eleven rules: https://exportain.com/blog/incoterms-for-shipments-from-bangladesh

• What an FOB price includes and where risk passes: https://exportain.com/blog/fob-free-on-board

• The full landed-cost method: https://exportain.com/blog/landed-cost-imports-from-bangladesh

• Post a free RFQ stating your FOB port of loading and on-board point: https://exportain.com/rfqs