Last reviewed: 10 September 2026
The gap between two quotes for the same goods usually comes from the delivery term, not the price. An Incoterm is a three-letter code that answers three questions: where cost changes hands, where risk passes to the buyer, and who handles customs. Before comparing quotes, make sure they all use the same Incoterm, otherwise you are comparing apples with pears.
The four most used terms
- EXW — Ex works: you collect the goods at the manufacturer’s door. Loading, inland haulage, export clearance and freight are yours.
- FOB — Free on board: we place the goods on the vessel at the port of loading and handle export clearance. Sea freight and arrival formalities are yours.
- CFR / CIF — Freight to the destination port is on us; CIF also includes insurance. Import clearance and inland delivery are yours.
- DAP — Delivered at place: carriage to the address you name is on us; import clearance and duties are yours.
Cost and risk do not end in the same place
This is the most misunderstood point. Under CFR and CIF the seller pays the freight, so cost sits with the seller up to the destination port; but risk passes to the buyer the moment the goods are loaded on the vessel. If something happens in transit, the bill lands with the buyer or the insurer, not the seller. That is why the scope of cover matters under CIF.
Do not use FOB for container cargo
FOB, CFR and CIF are built around loading onto a vessel; risk transfers as the goods cross the ship’s rail. A container, however, is handed over at the terminal, not to the ship, and may sit there for days. In that gap it is arguable who owns the goods. For container cargo the correct terms are FCA, CPT and CIP, and the International Chamber of Commerce recommends exactly that. Since the FOB habit persists in the market, the quote should say plainly which one is meant.
Which one to choose
- If this is your first import or you have no logistics team, CFR or CIF: one contact, one invoice.
- If you work with your own forwarder and get a better freight rate, FOB or FCA.
- If you have no representative in the destination country and want door delivery, DAP.
- Be careful with DDP: import duties and tax liability in the destination country move to the seller, which is not practical in every country.
How it should appear in the quote
Writing "CIF" alone is incomplete. Three parts belong together: the term, the named place and the rule version. The correct form is CIF Lagos, Incoterms 2020. Without the place it is unclear which port it runs to; without the version it is open to argument which rule set applies. Our quotes state all three.