Incoterms for Green Coffee: FOB, CFR, CIF and DAP

An Incoterm defines two things: where the seller's cost obligation ends, and where risk passes to the buyer. It does not define who arranges what in practice, and it says nothing about payment terms.

Get the term and the named place in the contract. "FOB" without a port is not a term.

The four you will meet in coffee

FOB — Free On Board (named port of shipment)

"FOB Cochin"

Seller delivers the coffee on board the vessel at the origin port and clears it for export. Risk passes when the goods are on board. Everything after that — ocean freight, insurance, destination charges, import clearance, inland delivery — is yours.

The workhorse term for green coffee, and the one most origin exporters quote by default.

CFR — Cost and Freight (named destination port)

"CFR Antwerp"

Seller pays ocean freight to the destination port. Risk still passes at origin, on board. So the seller is paying for carriage on your risk — which surprises people the first time.

You insure. You handle import clearance and inland delivery.

CIF — Cost, Insurance and Freight (named destination port)

"CIF Hamburg"

As CFR, plus the seller buys marine insurance. Risk still passes at origin.

Note that CIF requires only minimum cover by default. For a container of green coffee that is usually inadequate. If you contract CIF, specify the cover level you want rather than accepting the default.

DAP — Delivered At Place (named destination)

"DAP our warehouse, Rotterdam"

Seller delivers to the named place, ready for unloading. Risk passes at destination. Import duty and clearance remain the buyer's obligation unless you use DDP.

The simplest term for a buyer and the most expensive, because the seller prices in every risk they are absorbing.

A comparison

Which to ask for on a first Indian shipment

If you have a freight forwarder you trust: FOB. You control the routing, you see the real freight cost, and you can consolidate with other shipments. This is what experienced importers use.

If you do not: CFR or CIF. Let the exporter arrange the ocean leg. You pay a margin on freight for the convenience, and on a first container that is usually a fair trade for not managing a booking from 8,000 km away.

DAP if you want one number and no logistics at all — reasonable for a small trial, expensive for a programme.

What you should not do is compare an FOB price from one supplier with a CIF price from another and conclude the first is cheaper. On the India–Europe route the ocean leg and destination charges are a material share of landed cost.

Insurance, specifically

If risk passes on board at Cochin and the container goes over the side in the Arabian Sea, the loss is yours under FOB, CFR and CIF alike.

Insure from origin. Marine cargo insurance for green coffee is inexpensive relative to the value and the alternative. Under CIF, check the cover level rather than assuming it is adequate.

What else the price must state

An Incoterm alone still leaves room for two honest quotes to differ:

• Packing — 60 kg or 30 kg jute, with or without a barrier liner. See GrainPro vs jute.
• Whether sampling and survey costs are included.
• Weight basis — net shipped weight or landed weight.
• Who bears demurrage if clearance is delayed.

Ask for a landed-cost breakdown rather than a single figure on a first purchase. Any serious exporter will provide one.

Hoysala ships from India to the port of your choice; the Incoterm and named place are agreed per contract.

The route itself is covered in shipping green coffee from India to Europe.