In the fire protection industry, cost overruns rarely come from the obvious. Contractors and distributors know how to budget for material, labor, and installation. But hidden within many pipe supply transactions are extra charges, freight surcharges, duties, brokerage fees, terminal handling costs, that quietly erode margins and create conflict between suppliers and buyers.
For distributors and contractors in Canada, this issue is particularly acute when sourcing from offshore mills. The difference between an FOB (free on board) or EXW (ex works) quote and a CIF (cost, insurance, freight) landed price can mean the difference between protecting a project’s profitability or absorbing unexpected losses.
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The illusion of the “low price”
FOB and EXW quotes often look attractive on paper. They present a bare-bones material cost, leaving logistics and duties in the hands of the buyer. At first glance, it appears you’re getting a deal, pipe at a lower unit price than domestic stock.
But once that pipe is on the water, the true costs begin to emerge:
- Ocean freight surcharges that fluctuate with market demand
- Fuel adjustments applied by carriers mid shipment
- Duties and tariffs that vary by HS code and country of origin
- Terminal handling charges at both export and import ports
- Customs brokerage fees, which can be higher than expected for high volume or multiple line item shipments
- Inland drayage costs from Canadian ports to warehouses or job sites
What began as a low per foot price can quickly become a financial headache. Worse, because many of these costs are passed to the buyer without transparency, contractors and distributors are left with unpredictable landed pricing.
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Why it matters for distributors
Distributors survive on margin stability. A two or three point swing in cost can erase profit in a highly competitive bid environment.
Consider an example: a distributor quotes a contractor based on FOB pipe pricing plus estimated freight. By the time the shipment clears customs, duties are 4% higher than anticipated, fuel surcharges have added $2,500 to the bill, and inland drayage costs spike due to chassis shortages. The distributor either absorbs the difference or passes it on, straining contractor trust.
This instability not only erodes margin, it undermines long term relationships with contractors who expect price reliability when budgeting jobs.
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Why it matters for contractors
Contractors face a similar challenge from the job site side. A delayed delivery because of customs disputes or unpaid duties means idle crews and missed AHJ inspections. Even if the pipe eventually arrives, the indirect costs of delay, labor downtime, rescheduled inspections, liquidated damages, dwarf the material savings promised by a low FOB price.
For contractors bidding fixed price projects, unpredictable landed costs passed down from distributors can push profitable jobs into loss territory.
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The case for CIF landed pricing
The alternative is CIF landed cost transparency. With a CIF model, the importer assumes responsibility for:
- Ocean freight booking and insurance
- Customs clearance and brokerage
- Duty and tariff calculation
- Port handling and terminal charges
- Inland freight to the designated delivery point
When contractors or distributors receive a CIF quote, they see the full landed cost, no hidden add-ons, no post shipment surprises.
The benefits are clear:
- Predictable margins: distributors know their resale spread is protected.
- Stronger contractor trust: contractors can quote projects with confidence that the pipe cost won’t increase mid job.
- Simplified paperwork: certificates, MTRs, and customs documents are bundled into one managed process.
- Reduced risk: the importer carries the exposure for fluctuating freight and duty rates, not the buyer.
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Stable pricing builds stronger partnerships
In a market where reliability matters as much as material quality, CIF landed pricing isn’t just a financial tool, it’s a relationship tool. Contractors and distributors who adopt CIF models reduce friction, avoid disputes, and build longer term trust with their partners.
By eliminating the uncertainty of hidden freight and duties, distributors can safeguard margins, contractors can bid more confidently, and projects move forward without last minute cost disputes.
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Conclusion
In fire protection supply, what you don’t see on the quote can hurt you. FOB and EXW prices may appear lower, but the hidden freight, duty, and brokerage costs they conceal often outweigh the savings.
CIF landed cost transparency is the smarter model. It protects margins, builds trust, and ensures the fire protection industry can focus on what matters most: safe, compliant projects delivered on time.