Incoterms look like three-letter shorthand and behave like contract clauses. Choose the wrong one and you may discover too late that you own the goods while they are still in someone else’s warehouse, or that you are paying for insurance you did not need.
The three most common for food
- FOB (Free On Board): seller delivers to the port and loads; risk transfers there. You control freight and insurance, which is usually cheaper if you ship regularly.
- CIF (Cost, Insurance and Freight): seller pays freight and minimum insurance to the destination port. Simple, but you don’t control the freight forwarder or the level of cover.
- DDP (Delivered Duty Paid): seller handles everything to your door including duty. Maximum convenience, highest price, and the seller controls the customs story.
Where the hidden costs live
Port charges, demurrage, inspection fees, and the difference between minimum insurance and full cover all sit in the gaps between terms. For temperature-sensitive cargo, CIF’s minimum cover may not protect a spoilage loss, so read the insurance clause carefully.
Matching the term to your capability
New importers often prefer CIF or DDP for simplicity. Once volumes grow and you have a trusted forwarder, FOB usually gives better cost control and visibility. There is no universally right answer — only the term that matches your logistics maturity.
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