FOB vs CMT vs Full Package: Models Compared

Marcus had been running his menswear brand for two years when he finally understood why his first offshore manufacturer kept misquoting him. He was asking for FOB prices. The factory was giving him CMT rates. His freight forwarder was calculating landed costs assuming full-package delivery. Nobody in the conversation was using the same definition — and Marcus was building a cost model on a foundation where three different people meant three different things by the same words.

This is not unusual. FOB, CMT, and full-package are the three most frequently confused terms in clothing manufacturing — and the confusion has real commercial consequences: undercosted production runs, unexpected materials charges, freight liability errors, and margin models that don’t survive contact with a real order.

This article defines all three models precisely, compares them across every operationally relevant dimension, and explains which model is appropriate at each stage of a brand’s development.

For the specific deep-dive on CMT, see What Is CMT Manufacturing? Cut-Make-Trim Explained. For the full sourcing context, see the Complete Guide to Clothing Manufacturers in UK.

Post Highlights

• CMT (Cut, Make, Trim) is a production model — defining the scope of what the factory does. The brand supplies all materials; the factory provides only labour
• FOB (Free On Board) is an Incoterm — a shipping and pricing term defining the point at which responsibility and risk transfer from seller to buyer. It says nothing about whether the factory sourced the materials
• Full Package (also called full-service or OEM) is a production model — the factory sources all materials, manages the supply chain, and delivers finished garments
• The most common confusion: brands conflate FOB with a production model. FOB is a price and logistics term that can apply equally to CMT and full-package production
• Choosing the wrong model for the brand’s stage of development is one of the most costly structural mistakes in early clothing production — it determines operational burden, capital requirement, quality control, and total cost

The Critical Distinction First: Model vs Incoterm

Before comparing the three, one distinction must be established clearly, because conflating it causes the Marcus problem described above.

CMT and Full Package are production models. They define the division of responsibility between brand and factory in sourcing materials and producing the garment. They determine what the brand must supply, what the factory supplies, and what each party’s operational role is.

FOB is an Incoterm (International Commercial Term). It defines the point at which risk and cost transfer from the seller (factory or freight forwarder) to the buyer (brand). It is a logistics and pricing term — not a production scope definition.

A garment can be priced FOB under either CMT or full-package production. “FOB £12.50” on a factory quotation means the price quoted includes the cost of the goods up to the point of loading on the vessel at the origin port — it says nothing about whether the factory sourced the fabric.

This is why the comparison in this article treats FOB as a pricing/delivery term within the broader context of CMT and full-package production models, and explains all three in relation to each other.

CMT Manufacturing — Defined

Cut, Make, Trim. The factory provides the labour to cut the fabric, assemble the garment, and apply all trims and finishing. The brand supplies all material inputs.

Brand supplies: Tech pack, patterns (graded), all fabric, all lining, all trims (zips, buttons, elastic, thread), all labels, all packaging.

Factory supplies: Premises, machinery, skilled operatives, production management, in-line and end-of-line quality inspection.

Factory charges: A CMT rate per unit — covering labour only. Materials are not included in the CMT price.

Risk profile: The brand bears all materials risk — fabric quality, dye lot consistency, delivery timing, and specification compliance of every input. The factory bears only production execution risk.

Pricing example: CMT rate of £18/unit for a structured woven shirt. The brand additionally pays: £8.50/metre fabric × 1.4 metres consumption = £11.90 fabric cost + £3.20 trims and labels = £33.10 total production cost per unit, before factory transport or warehouse receipt.

Full Package (Full-Service) Manufacturing — Defined

Full Package (also called full-service, OEM — Original Equipment Manufacturer, or sometimes erroneously ODM — Original Design Manufacturer) is a production model in which the factory sources all materials, manages the supply chain, and delivers a finished garment to the brand’s specification.

Brand supplies: Design, tech pack (or design brief), size specifications, approved colour references, quality standards, and final approval at sample stage.

Factory supplies: Fabric sourcing and procurement, trim sourcing, pattern development (sometimes), grading, production management, all material inputs, finished garment.

Factory charges: A per-unit price covering labour, materials, factory overhead, and factory margin on materials. The brand sees a single quoted unit price — not a breakdown of CMT + materials separately.

Risk profile: The factory bears materials sourcing risk. The brand bears the risk of the factory’s sourcing decisions — if the factory substitutes fabric, uses a different dye lot, or sources a slightly different trim, the brand may not discover this until the goods arrive.

Pricing example: Full-package price of £38/unit for the same structured woven shirt. This includes fabric (£11.90 equivalent), trims (£3.20), factory labour (£18.00 CMT equivalent), and factory materials margin (£4.90) — arriving at approximately the same total cost as CMT but with different risk and operational structure.

FOB — The Incoterm Explained

Free On Board. Under FOB terms, the seller (factory, exporter, or freight agent) is responsible for the cost and risk of the goods until they are loaded on board the named vessel at the origin port. Once the goods are on the vessel, risk and additional freight costs transfer to the buyer.

What FOB pricing includes: All costs up to and including loading at origin port — production cost, inland haulage to port, export customs clearance, port handling fees, and loading charges.

What FOB pricing excludes: Ocean freight, marine insurance, destination port handling, import customs clearance, import duty, and inland haulage to the buyer’s warehouse.

Other Incoterms in common use:

For UK brands importing from offshore, FOB is the most common pricing basis for offshore manufacturing — it is the point at which the UK brand’s freight forwarder takes over responsibility. DDP is the most useful for total landed cost comparison — because it includes everything.

FOB applied to CMT: “FOB £12.50 per unit CMT” means the factory charges £12.50 for its labour, delivers the finished garments (from brand-supplied materials) to the vessel at origin port, and the brand pays freight and all destination costs from that point.

FOB applied to full package: “FOB £38 per unit” means the factory has sourced all materials, produced the garments, and delivers them loaded on the vessel — the brand pays freight and destination costs from that point.

The Three Models Compared: Full Operational Analysis

How to Build a Landed Cost Model Using All Three

Understanding all three terms together is most useful when building a landed cost model — the total cost of getting a finished garment to your warehouse.

CMT landed cost model (UK domestic):

Full-package FOB landed cost model (offshore):

The comparison: The offshore full-package route produces a landed cost of £18.34 versus the UK CMT route at £35.30 — a difference of £16.96 per unit. At 500 units, that is £8,480. The brand must decide whether the UK production advantages — shorter lead time, no import duty on a domestic equivalent, British craftsmanship brand positioning, quality control proximity — justify the per-unit cost premium.

That is the commercially honest version of the CMT vs full-package vs FOB comparison.

Which Model Is Right at Each Brand Stage?

Early-stage brand (pre-revenue, first production run):

Full-package production is almost always more appropriate. The operational infrastructure required for CMT — tech packs, graded patterns, fabric supply chains — takes time and money to build. Full-package reduces the number of moving parts in a first production run, allowing the brand to focus on product quality and market fit rather than supply chain management. The factory materials margin is the cost of that operational simplicity.

The typical entry route: full-package offshore (Bangladesh or Turkey) for core volume at acceptable cost, with small CMT UK runs for hero pieces or reactive production.

Growing brand (established product range, growing volume):

CMT becomes progressively more attractive as the brand builds sourcing infrastructure. A brand that has fabric supplier relationships and a pattern cutter in place can use CMT to remove the factory materials margin, gain complete control over fabric quality, and reduce per-unit production cost as volume grows.

The transition point is typically when the brand’s annual fabric spend is large enough that direct procurement is meaningfully cheaper than factory-sourced — usually from approximately 500 units per season per fabric per style.

Established brand (significant volume, multiple categories):

Most established brands operate both models simultaneously — CMT for categories where material quality control is paramount or where UK production is commercially justified by lead time or brand positioning, and full-package for commodity volume at offshore facilities.

FOB pricing is standard for offshore production at this stage — with experienced logistics teams managing freight, customs, and landed cost calculation.

Common Mistakes Across All Three Models

Mistake 1: Treating FOB as a production model Why it happens: factory quotations often say “FOB £X” without clarifying whether it is CMT or full package. Exact fix: always confirm whether a quoted price is CMT (brand supplies materials) or full-package (factory supplies materials) — separately from whether the Incoterm is FOB, CIF, or DDP.

Mistake 2: Comparing CMT rates to full-package prices without adding materials Why it happens: a CMT rate of £18 looks cheaper than a full-package price of £38, without adding the £17 materials cost that makes the CMT total £35. Exact fix: always compare total landed costs — CMT rate plus all materials, versus full-package price plus freight and duty. The comparison is only meaningful at the landed cost level.

Mistake 3: Using FOB pricing without modelling the full landed cost Why it happens: brands accept the FOB price as the production cost and forget to add freight, duty, insurance, port handling, and inland haulage. Exact fix: build a complete DDP (Delivered Duty Paid) equivalent cost for every offshore supplier quote before comparing to a domestic CMT equivalent.

Mistake 4: Choosing CMT before patterns exist Why it happens: brands approach CMT factories assuming the factory will help develop patterns. Exact fix: CMT factories work from brand-supplied patterns. Pattern development is a pre-CMT activity. Engage a pattern cutter first.

Mistake 5: Choosing full-package without scrutinising factory materials sourcing Why it happens: brands hand off materials responsibility to the factory and do not verify what the factory actually sources. Exact fix: require fabric and trim specification sheets from the factory before sample production begins. Approve materials samples alongside the garment sample. The fabric in the approved sample must match the bulk fabric.

For how Silk Routes operates as a CMT manufacturer — what we need from brands, what the production process looks like, and how we work with brands from enquiry to delivery — our manufacturing services page covers our approach in full. To find out more about Silk Routes, find out more about Silk Routes.

FAQ

What is the difference between CMT and FOB in clothing manufacturing?

CMT is a production model — it defines what the factory does (cuts, sews, trims) and what the brand supplies (all materials). FOB is an Incoterm — it defines the point at which pricing and risk transfer from seller to buyer (at the point of loading on the vessel at origin port). The two describe different things and can apply simultaneously: a factory can quote a CMT service on FOB terms, meaning the brand supplies materials, the factory produces the garment, and the price quoted covers production to the point of vessel loading.

Is FOB better than CIF or DDP for clothing imports?

Each Incoterm suits a different operational model. FOB is most common for experienced importers with established freight forwarders — it gives the brand control over the freight leg and typically produces a lower factory-quoted price. CIF (Cost, Insurance, Freight) is appropriate where the factory or agent has better freight buying power than the brand. DDP (Delivered Duty Paid) is the most convenient but typically the highest-quoted price, as the factory or agent absorbs all destination costs including import duty. For total cost comparison purposes, always model DDP equivalents regardless of which Incoterm the supplier quotes.

What is full-package manufacturing in clothing?

Full-package manufacturing (also called full-service or OEM) is a production model in which the factory sources all materials, manages the supply chain, and delivers finished garments to the brand’s specification. The brand provides design, tech pack, and quality standards — the factory handles everything else. The factory quotes a single per-unit price covering labour, materials, and factory overhead. It is most appropriate for brands without established fabric sourcing infrastructure or for offshore production where the brand cannot efficiently manage direct material procurement.

When should I use CMT vs full package?

CMT is appropriate when the brand has: a complete tech pack, graded patterns, established fabric supplier relationships, the operational capacity to manage direct material procurement, and sufficient volume to make direct sourcing cost-effective. Full-package is appropriate when the brand lacks some or all of these — particularly at early stage, for first production runs, or for offshore production where direct material sourcing is logistically complex. Most established brands use both models simultaneously across different product categories.

How do I calculate the total cost of CMT production?

Add the CMT rate to all materials costs: fabric (price per metre × consumption in metres), lining (if applicable), all trims (zips, buttons, elastic, thread — sourced at BOM-specified quantities), all labels (care, size, brand, country of origin), packaging, and delivery to warehouse. The sum of CMT rate plus all materials is the total production cost per unit. Compare this figure — not the CMT rate alone — against a full-package price to make a meaningful cost comparison.

Citations and Sources

[1]. International Chamber of Commerce — Incoterms 2020: official definitions of FOB, CIF, DDP, EXW, and all other Incoterms. https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/

[2]. UKFT — UK Fashion and Textile Association: manufacturing model guidance and CMT industry definitions. https://ukft.org/

[3]. HMRC — UK Trade Tariff: import duty rates applicable to clothing (12% UKGT for Turkey, Portugal; 0% DCTS for Bangladesh). https://www.trade-tariff.service.gov.uk/

[4]. Silk Routes Manufacturing Team — CMT rate ranges 2026 and landed cost modelling: practitioner data from active UK CMT production. https://silkroutes.co.uk/clothing-manufacturing-services/

[5]. GOV.UK / Low Pay Commission — National Living Wage April 2026: £12.71/hour (basis for UK CMT cost calculations). https://www.gov.uk/government/publications/the-national-minimum-wage-in-2026/the-national-minimum-wage-in-2026