Updated: Oct 5, 2020
In the last article, we introduced the reasons to consider buying your boat from another country. Here, we'll dig a bit deeper into the process of buying a boat abroad, and in particular, talk about the costs associated to it.
Before jumping in, there are some other great articles talking about things to watch out in international boat purchases, such as registration, contract review, and sea trials. Marine journalist Alex Smith talks about his summary of the steps to take for buyers in UK in this article, and is a good reference to begin with no matter where you are located.
The reason we want to summarize the types of costs for buying boats abroad here is twofold.
To make the process of buying boats abroad transparent to our customers and any boat lovers, to avoid unexpected charges
To clarify the various lingos that's often associated with international trade, which is a specialized business domain by itself, so it helps you do better research by yourself
The types of costs can be summarized into 5 categories. Read on to find out what they are.
#1: Cost of Goods (EX Works / EXW)
If you're getting a quote from us, or just any boat manufacturer abroad, chances are you'll run into a term called Ex Works.
According to Investopedia, Ex Works means the cost associated with the supplier making the product available at a certain location, but the buyer has the cover the transportation cost. What it means in simple terms, is that when you purchase a boat from a Chinese boat supplier like Bestyear (or a supplier based in any foreign country), this is the price we'll manufacturer the boat, and make it available to you on the manufacturing site after it's been completed.
If you're not planning on walking to our office to pick your passenger boat up (we'll treat you coffee if so), what this means is,
You'll want your boat supplier to arrange shipping for you (both land transportation to the port, and ocean freight)
Or, you can find your own shipping company
Either way, Ex Works simply refers to the price of the product itself, excluding delivery.
The Panga 750 model as-is in the manufacturing facility
#2: Cost of Land Transportation (FOB)
FOB is probably one of the most commonly used terms in quoting boat buyers. It stands for the price of the goods, plus the delivery of the good to the nearest port.
If you ordered a Bestyear 33H Yacht from Qingdao (which we highly recommend), and paying for FOB, the contract bounds that we'll deliver the yacht to Qingdao Port and assume responsibilities to it until it load onto the ship.
For buyers who would like to appoint their own shipping agency, or who already has a shipping container bought for other merchandise and just wants to fit a small boat (e.g. inflatable ones) in, quotes and contracts in FOB are not uncommon.
For quotations in FOB, you'll always see it followed by a location name - e.g. FOB Qingdao. This means the quotation is given based on the goods to be shipped to and delivered at Qingdao port.
Bestyear Passenger Boat 1380F being loaded for shipment
#3: Cost of Ocean Freight (C&F / CIF)
After the boat has been loaded onto the nearest port, the next logical step is to ship it to the destination, whether it's in Australia, Nigeria, or Florida.
Shipping cost is not typically quoted with the product, and specific to the product and destination. If you're thinking of buying a boat abroad, then shipping should be an important factor to keep in mind, since this cost is typically the second most significant compared to the the price of the product itself.
In our experience, there are usually a number of factors impacting the cost of shipping a boat,
The size of the boat / yacht - Ever wonder why so many boats are built to 13.8m in length? It's because that's the magic number of a vessel to fit in a 40' container. The size of the boat directly determines whether it'll require a 20 or 40 feet container, or whether it'll not fit in a container at all - which means flat rack shipping which is slightly more costly. As a reference, one Bestyear Cabin Speed Boat 550A will fit right in a 20' container, whereas the "Boatahome" Houseboat 1280 will require flat rack shipping.
The destination port & timing - It's intuitive that the distance of the trip will affect the freight cost. However, this difference sometimes could be higher than you think. During COVID, shipping costs for North America destinations have increased significantly. As a result, at the time this article is being written, the cost of a 40' container shipped to Barcelona, Spain is US$1,211, whereas the same container will cost over US$5,000 for Miami, US. It is wise to always take shipping into consideration while you make a purchase.
In international trade, C&F stands for Cost & Freight, which includes the price of the goods, as well as shipping cost to destination port. CIF has only one more element than C&F, that is shipping insurance. If you received a quote from your Chinese boat supplier for $40,000 for CIF to Miami, Florida, that means the quoted price take away all the worries for you until the boat reaches the Miami port.
It's a standard procedure to insure your boat while it's shipped, simply to prepare for unexpected damages when it's on the ocean. If you happen to have found out that parts of your boat is scratched or broken upon receiving your shipment, you can simply claim with the insurance company for the lost value.
#4: Port Charges
This is probably the most overlooked cost category for a lot of buyers, simply because it is always assumed by the buyer themselves, and not provided in the quotation from the Chinese boat supplier / manufacturer.
Port charges includes a list of miscellaneous charges which the buyer is required to pay at the time the shipment is being picked up, in compensation for the use of port services and facilities. It normally isn't a significant amount compared to the cost of the goods itself, so we'll skip this section quickly. You can read more about port charges here from the article by XChange.
#5: Cost of Local Registration
Depending on the purpose and cruising conditions of the boat you're purchasing, it could require registration with your local authority. If your boat is intended for commercial purposes, such as passenger transportation, dining, leasing, certain commercial registration will be required as applicable as well.
Although this sounds like a daunting process, there's really no need to worry about registering your boat purchased abroad. In most countries, there are plenty of local agencies that specialize in helping with the boat registration process for its owners. You can simply search them up and give them a call, with the necessary documentation provided by your boat supplier on details of your boat.
Conclusion & Easter Egg
Let's summarize the 5 different costs that people typically encounter while buying boats abroad here as simple equations.
Cost of purchasing the boat as is
Cost of transporting the boat to its nearest port
Cost of shipping the boat to where the buyer is with shipping insurance
Some charges taken by the destination port
Some charges required to register the boat locally
To help you understand better the jargons in international trade when you receive a quote from your Chinese boat supplier,
EXW (Ex Works) = #1
FOB = #1 + #2
CIF = #1 + #2 + #3
#4 and #5 are typically assumed by the buyers, and are not quoted by the boat suppliers
As a conclusion, when calculating your budget for buying a boat abroad, understand that there are more charges outside of the price of the boat itself. Consult with your supplier about the type of quotation you receive, and what costs it assumes for you to take care of yourself.
We wish everyone to enjoy the benefit of having access to boats and yachts offered by another market, while understanding the costs and risks associated, and able to make informed decisions.
Easter Egg: I found out that you can now check for yourself how much a container costs for shipping at this website (definitely not an advertisement).
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