International Trade
FOB, CFR or CIF: Choosing an Incoterm for Spice Shipments
How the three most common sea-freight Incoterms divide cost and risk between exporter and importer.
An Incoterm tells both parties who pays for each leg of the journey and when risk passes from seller to buyer. For sea shipments of spices, three terms cover most contracts.
FOB: Free On Board
The exporter delivers the goods, cleared for export, on board the vessel at the Indian port. From that point the buyer pays ocean freight and insurance and carries the risk.
FOB suits buyers who have their own freight forwarder or negotiated shipping rates.
CFR: Cost and Freight
The exporter also books and pays ocean freight to the destination port. Risk still passes to the buyer once the goods are on board in India, so the buyer normally arranges cargo insurance.
CIF: Cost, Insurance and Freight
As CFR, with the exporter also buying minimum cargo insurance for the buyer's benefit. Risk still transfers at loading. Buyers who need broader cover should say so in the enquiry.
Which one to choose
- Choose FOB if you control your own logistics.
- Choose CFR or CIF if you prefer a delivered price to your port.
- Always name the port, for example "FOB Mundra" or "CIF Jebel Ali", so the quotation can be compared like for like.
Tell us your preferred term and destination port when you request a quotation.
