Incoterms for a first charcoal import: FOB or CIF

The first quotation for a charcoal import usually arrives with three letters next to the price: FOB, CIF, sometimes both. Buyers who have imported other goods read them without a second thought. Buyers on a first import often compare two prices that are not comparable, because the letters change what the price contains.

Kora’s product pages list FOB and CIF among the trade terms. This note explains what FOB or CIF means in practice for a container of coconut shell charcoal or briquettes, and what to put in writing before you choose.

What an Incoterm settles, and what it does not

An Incoterm is a short code from the International Chamber of Commerce that divides three things between seller and buyer: who arranges and pays each leg of the journey, who carries the risk of loss or damage and at which point, and who handles export and import clearance. It does not settle the price, the payment method, the quality or when ownership passes. Those sit in your contract.

Keep that boundary in mind. Many disputes begin when one side assumes a term decides something it does not.

FOB: the seller loads, the buyer takes over at the ship

With FOB (free on board) and a named port of shipment, the seller delivers the goods on board the vessel you nominate and clears them for export. From the moment the goods are on board, risk passes to you. You pay the ocean freight, insure the cargo if you wish, clear it into your country and pay everything after loading.

What this means for you:

• You choose the carrier and the forwarder, so you control the freight price and the routing.
• You need someone on the Indonesian side who can coordinate with the plant on cut-off dates.
• The price on the quotation is lower than a CIF price because freight and insurance are not in it.

CIF: the seller books the sea leg to your port

With CIF (cost, insurance and freight) and a named destination port, the seller contracts and pays the ocean freight and a minimum level of insurance to your port. Risk, however, still passes to you at loading, not at arrival. That surprises many first-time buyers: the seller pays for transport that the buyer carries the risk on.

What this means for you:

• One quotation covers more, so it is easier to budget.
• You depend on the seller’s choice of carrier and schedule.
• The insurance under CIF is a minimum. If you want wider cover, ask for it or buy your own policy.
• Local port charges at your end are normally still yours; check the quotation for what “to your port” excludes.

A note on containers

The ICC has pointed out that FOB and CIF are written for goods that are loaded on the ship, not handed over at a terminal in a container. For containerised cargo, other terms such as FCA or CIP often fit the real handover better. Kora lists FOB and CIF; whether it can quote a different term is a question for sales, and one worth asking if your forwarder prefers it.

Putting two quotations side by side

If one supplier quotes FOB and another CIF, convert them before you compare. Ask your forwarder for an ocean freight and insurance estimate to your port, and add it to the FOB price. Do the same for the origin charges the FOB price leaves out, such as trucking from the plant to the port, if the quotation puts them on you. Only then do the two figures mean the same thing.

What to settle in writing

• The named port of loading and the named port of discharge.
• The Incoterms edition you refer to, for example Incoterms 2020.
• Who books the vessel and who nominates the forwarder.
• The cut-off dates for delivery of the cargo to the port or terminal.
• Who pays origin handling, and whether the price includes it.
• The insurance level under CIF, or who insures under FOB.
• Which documents the seller supplies, and by when. Kora lists a certificate of analysis, phytosanitary certificate, certificate of origin, packing list and bill of lading.

The sea-carriage status of charcoal is its own subject. We cover the questions to put to your forwarder in a separate note on dangerous-goods classification.

FOB or CIF: which should a first-time buyer choose

There is no single answer. If you have a trusted forwarder and want control, FOB gives it. If you want one price and have no forwarder yet, CIF is easier, as long as you understand that the risk still passes at loading and you check the insurance. Either way, decide by writing down who does what, not by the letters.

Ask for both

You can ask sales to quote the same container under FOB and CIF so you see the difference in one place. See what Kora prints on the briquette import page, then send your destination port, product and volume through the contact page. The first reply comes within two business days.