Incoterms are standard trade terms published by the International Chamber of Commerce. They define who arranges and pays for transport and insurance, who handles customs and where the risk passes from seller to buyer. The current edition is Incoterms 2020.
The terms used most in agri trade
| Term | Seller arranges | Risk passes | Typical use |
|---|---|---|---|
| EXW (Ex Works) | Goods made available at seller’s premises | At seller’s premises | Buyer controls everything; export clearance is handled by the buyer |
| FCA (Free Carrier) | Delivery to buyer’s carrier, export cleared | When handed to the carrier | Containers and air freight |
| FOB (Free On Board) | Loading on the vessel, export cleared | When goods are on board at the port of loading | Sea freight; buyer books ocean freight |
| CFR (Cost and Freight) | Main sea freight to destination port | When goods are on board at the port of loading | Buyer arranges insurance |
| CIF (Cost, Insurance and Freight) | Sea freight plus minimum insurance | When goods are on board at the port of loading | Buyer wants one delivered-price quote |
| DAP (Delivered at Place) | Transport to named place | At named place, not unloaded | Door delivery; import clearance by the buyer |
FOB or CIF?
Buyers with their own freight forwarders often prefer FOB because they can control cost and routing. Buyers new to importing often prefer CIF or CFR because the seller handles the sea freight, which makes it easier to compare delivered prices. Note that under CFR and CIF, risk passes at the port of loading even though the seller pays for the main carriage.
Points to confirm in the contract
- The named port or place (for example “FOB Mundra” or “CIF Rotterdam”).
- The Incoterms edition (for example “Incoterms 2020”).
- Who pays for destination charges, demurrage and import duties.
- Insurance cover, if it applies.
Tell us your preferred Incoterm when you request a quotation, or ask us to compare FOB and CIF for your destination.
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