📌 Key Takeaways

Most procurement teams unknowingly compare incomparable quotes, leading to false savings and costly surprises downstream.

Responsibility Boundaries Drive Cost Lines: Different Incoterms shift who pays for freight, insurance, duties, and delivery—making direct price comparisons meaningless without normalization.

Add Missing Legs to Level the Field: Convert every quote to the same “to-door” basis by adding freight, insurance, port handling, duties, and final delivery costs where they’re excluded.

Document Every Assumption: Create an assumption log capturing freight rates, insurance basis, HS codes, FX rates, and delivery requirements—this single document prevents most post-award disputes.

Insurance Oversight Kills Deals: Most teams completely miss the insurance component when comparing quotes, yet coverage scope and insured value assumptions can dramatically shift total costs.

The Apparent Winner Usually Isn’t: After proper normalization, the lowest-looking quote frequently becomes the most expensive once all hidden costs surface.

Normalized comparisons reveal true cost leaders and eliminate procurement surprises.

For kraft paper buyers and procurement professionals managing international supplier quotes across different trade terms.

Stop comparing apples to oranges.

The room is quiet, projector humming, three quotes on screen: one EXW, one CIF, one DDP. Each looks “cheapest” in a different way. You need a fair, defensible choice—without argument later about who forgot insurance, duties, or the last-mile truck.

How to compare EXW, FOB, CIF, and DDP fairly: Convert every offer to the same to-door basis. Map responsibility by term (per ICC Incoterms), add the missing cost legs (freight, insurance, handling), apply the same HS code and duty method across all quotes, and log all assumptions (lane, dates, coverage, and FX). Only then decide.

 

Quote Normalization Checklist

Use this checklist to convert any Incoterms quote to a comparable to-door total:

□ Map responsibilities per Incoterms (seller vs buyer obligations)
□ Add missing freight costs (ocean, air, or land transportation)
□ Add missing insurance (marine cargo or equivalent coverage)
□ Apply import duties using consistent HTS classification
□ Include port/terminal handling charges
□ Add inland delivery to final destination
□ Document assumptions (freight lanes, rates, insurance basis, FX rate/date)
□ Apply consistent currency and exchange rate basis

 

Why “As-Is” EXW vs CIF vs DDP Breaks Decisions

Incoterms allocate cost, risk, and tasks differently. A price that looks low may exclude big downstream items. That disparity invites two problems: false savings when unpriced legs pop up later, and dispute risk when teams assume different responsibilities.

The International Chamber of Commerce (ICC) Incoterms rules define precise responsibility boundaries. Understanding these boundaries is essential for accurate cost comparison.

EXW (Ex Works) places minimum responsibility on the seller. The buyer assumes all transportation costs, insurance, export/import procedures, and duties from the seller’s facility.

FOB (Free on Board) requires the seller to clear goods for export and deliver them aboard the vessel. The buyer covers ocean freight, insurance, import duties, and inland delivery.

CIF (Cost, Insurance, and Freight) includes ocean transportation and minimum marine insurance to the destination port. Import duties, port handling, and inland delivery remain the buyer’s responsibility.

DDP (Delivered Duty Paid) represents maximum seller responsibility. The seller covers all costs including duties and delivers to the buyer’s specified location.

When procurement teams compare quotes without accounting for missing cost components, the apparent “winner” often becomes the most expensive option once all costs surface. Consider two quotes for 500 metric tons of kraft paper. The EXW quote appears to be $50 per metric ton lower than the CIF quote. However, if ocean freight adds $75 per metric ton, the EXW option actually costs $25 more per metric ton than initially apparent.

 

The Normalization Method: One To-Door Basis for All Quotes

 

 

Step 1: Map Responsibilities by Incoterms

Use the term on each quote to identify who pays for each leg. At a high level:

 

• • EXW: Buyer handles pickup, export, main carriage, insurance, import, and delivery

 

• • FOB: Seller clears export and loads; buyer covers main carriage onward

 

• • CIF: Seller pays cost, insurance, and freight to destination port; buyer covers import and delivery

 

• • DDP: Seller covers almost everything to the named place, including import duties/taxes

Create a responsibility matrix for each quote. List every cost component from origin to destination: export clearance, origin handling, main carriage, marine insurance, destination port charges, import clearance, import duties, and final delivery.

 

Step 2: Add the Missing Legs

Build a consistent cost picture by adding any unpriced items for each quote so every offer reaches the same to-door point:

 

• • Origin: pickup/parking, terminal handling, export clearance

 

• • Main carriage: ocean/air/land linehaul plus fuel/surcharges

 

• • Insurance: cargo insurance with stated coverage terms

 

• • Destination: terminal handling, delivery order, deconsolidation

 

• • Import: customs brokerage, duties, taxes, other government fees

 

• • Final mile: delivery to receiving location(s)

Most teams miss the insurance line entirely. State the coverage basis (scope and insured value assumptions) for every quote before comparing totals. For kraft paper shipments, typical ocean freight rates vary significantly based on container type, seasonal demand, and port pair. Insurance rates depend on coverage level and trade route risk assessment.

 

Step 3: Apply Duty/Tax Consistently

Use one HS code across all quotes (same product, same code) and a consistent valuation basis when estimating duty and taxes. Most kraft paper products fall under HTS Chapter 48 (Paper and paperboard), but specific subheadings depend on factors like recycled content, bleaching status, and grammage.

The World Customs Organization (WCO) Harmonized System provides foundational information on classification principles. Apply the same HTS classification and duty rate to all quotes using current rates from your country’s customs authority.

 

Step 4: Log Assumptions So Everyone Aligns

Create an Assumption Log next to your comparison:

 

• • Freight lane & date used for rate look-up

 

• • Insurance basis (coverage scope and insured value basis)

 

• • FX basis and rate date if quotes arrive in different currencies

 

• • HS code and duty/tax method used for the estimate

 

• • Delivery profile (single-drop vs multi-drop; special equipment if needed)

 

• • Validity window for each assumption

This assumption log becomes critical when presenting normalized results to finance and operations teams. It also enables accurate updates when market conditions change.

 

Normalization Comparison Table

Normalization Comparison Table

Cost Component	EXW Quote	FOB Quote	CIF Quote	DDP Quote
Base Price	✓ Included	✓ Included	✓ Included	✓ Included
Origin pickup & export clearance	(add)	✓ (export)	✓ (export)	✓
Main carriage	(add)	(add)	✓	✓
Cargo insurance	(add)	(add)	✓	✓
Destination terminal/handling	(add)	(add)	(add)	✓
Import clearance, duty, and taxes	(add)	(add)	(add)	✓
Last-mile delivery to door	(add)	(add)	(add)	✓
Normalized to one to-door total	Sum	Sum	Sum	As quoted

CIF may look cheapest until destination, import, and last-mile are added. EXW may look expensive after adding full logistics—but provides control over carrier and schedule. DDP removes complexity but may bake in conservative buffers. The “winner” often flips after normalization.

 

Pros, Trade-Offs, and What to Watch

 

 

EXW

Strengths: Maximum control of logistics; flexible carrier choice.

Things to watch: Hidden origin/handling costs; export formalities; more internal workload.

 

FOB

Strengths: Seller handles export/load; buyer controls main carriage.

Things to watch: Destination charges can surprise; ensure cutoff/roll risk is clear.

 

CIF

Strengths: Freight and insurance included to destination port.

Things to watch: Destination/last-mile, brokerage, and duty not included; insurance basis may differ from your standard.

 

DDP

Strengths: Simplicity; a single, to-door figure.

Things to watch: Embedded buffers; confirm import responsibility legitimacy and tax registration where required.

 

Governance That Prevents Disputes

Before award, run a quick approval matrix:

Logistics/Trade Compliance: confirms Incoterms mapping, carrier/insurance fit, and import feasibility.

Finance: confirms HS/duty method, FX basis/date, and tax treatment.

Operations/QA: confirms delivery profile and receiving constraints.

Capture approvals on the Assumption Log. This single page ends most post-award debates. Define clear approval requirements for normalized quote selections, ensuring each stakeholder group validates their area of expertise before contract signature.

 

Frequently Asked Questions

 

How do you compare EXW and CIF fairly?

Normalize both to to-door. Add origin, export, destination, brokerage, duty, taxes, insurance, and last-mile where missing. Document the HS code and valuation basis, then compare totals on that same basis.

 

Do Incoterms decide who pays import duty?

Incoterms allocate tasks and costs; they don’t change the law. Under DDP, the seller typically takes import obligations, but compliance depends on local requirements. Duty still derives from classification and valuation under customs rules.

 

Is CIF insurance always enough?

Not necessarily. Coverage scope and insured value basis vary. State the insurance assumption for every quote and align it to organizational standards. If unclear, consult the ICC Incoterms guidance and your broker.

 

What to Do Next

Build your comparison using the checklist and table above. Align stakeholders via the Assumption Log and approvals. Then engage the market with confidence.

For comprehensive procurement optimization strategies, explore our Comparability Before Price framework, which addresses specification alignment before price analysis.

Connect directly with verified suppliers through our kraft paper supplier directory or explore kraft paper manufacturers for direct sourcing opportunities.

Ready to expand your procurement toolkit? Find suppliers for your specific requirements or contact buyers to share your capabilities in the global kraft paper market.

 

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