A rock salt quotation cannot be compared only on the price per tonne. If two offers use different delivery terms, they include different logistics responsibilities and costs. Incoterms rules are commonly used to define key delivery, risk and cost responsibilities between seller and buyer.

EXW

Under EXW, goods are placed at the buyer’s disposal at the named place. Much of the transport organization is handled by the buyer. In practical export operations, alternatives such as FCA may also be considered depending on how export formalities and collection are arranged.

FOB

FOB is one of the rules intended for sea and inland waterway transport. A quotation should identify the named port of shipment rather than stating only “FOB,” so the included origin responsibilities are clearer.

CFR

Under CFR, the seller contracts carriage to the named destination port. Payment of freight to destination does not mean that risk transfers at destination; risk allocation follows the specific Incoterms rule.

CIF

CIF follows a maritime structure similar to CFR and adds the seller’s insurance obligation defined by the rule. Buyers should still review whether the insurance level matches their commercial requirements.

How to compare quotations

  • Same product specification
  • Same packaging
  • Same quantity
  • Same named port/place
  • Same Incoterms edition
  • Clear understanding of destination-local charges

Write the term completely

FOB [Named Port of Shipment], Incoterms® 2020 is more informative than “FOB price.” Contractual, customs and tax implications should be confirmed by the parties with their own qualified advisers.

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