Spices & Coffee Trade

Incoterms for Spice and Coffee Buyers: FOB, CFR, CIF and DAP Explained

Incoterms 2020 explained for spice, coffee and pulse buyers — who pays for freight, insurance and duties, where risk passes, and which terms suit first-time importers.

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Incoterms decide who pays for what and when risk passes from seller to buyer. Getting them wrong can mean surprise costs or uninsured cargo.

The terms you'll see most

Term Seller pays Risk passes
EXW Goods ready at the warehouse At the warehouse
FOB Export clearance and loading on the vessel On board at the port of loading
CFR FOB plus sea freight to your port On board at the port of loading
CIF CFR plus minimum cargo insurance On board at the port of loading
DAP Delivery to your named place At your named place (duties on you)

Which to choose

  • First-time importers: CIF or CFR is simplest, because the seller books the freight
  • Buyers with a forwarder: FOB gives you control of freight cost and schedules
  • Want door delivery? DAP, but you still handle import clearance and duties

Watch out for

  • CIF insurance is minimum cover, so consider topping it up
  • Risk passes at loading under FOB, CFR and CIF, even though the seller pays freight under CFR and CIF
  • Destination charges (terminal handling, delivery) are usually yours

Example

A buyer in Hamburg buys pepper CIF Hamburg. We ship from Kochi and pay freight and insurance, and the buyer pays destination charges, duties and delivery to their warehouse.

See our export & shipping page.

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