Incoterms Guide

Quick answer: FOB means the buyer arranges and pays for the main sea freight from the Indian port onward; CIF and CFR mean the seller arranges it (CIF also includes insurance); EXW means the buyer arranges everything from our warehouse door. Which one you choose affects your price, your risk, and how much logistics coordination falls on you. Choose based on your logistics set-up, not habit.

Incoterms® are trade terms published by the International Chamber of Commerce (ICC); the current edition, Incoterms® 2020, came into force on 1 January 2020. The ICC set has eleven terms. The four below cover almost every order we quote.

EXW — Ex Works

We make the goods available at our warehouse or factory. You (or your forwarder) arrange and pay for everything from there — inland transport to port, export customs formalities, ocean freight, import customs, and delivery to your final location. This gives you maximum control over logistics but requires you to have or appoint a capable forwarder in India.

FOB — Free On Board

We handle inland transport to the Indian port, export customs clearance, and loading the goods onto the vessel you've booked. You (or your forwarder) book the ocean freight and take on risk once the goods are loaded. This is the most common term for experienced importers who already have freight relationships.

CFR — Cost and Freight

We handle everything FOB covers, plus we book and pay for ocean freight to your destination port. Risk still transfers to you once goods are loaded at the Indian port — insurance for the ocean leg is your responsibility.

CIF — Cost, Insurance and Freight

Same as CFR, but we also arrange marine insurance for the shipment. This is popular with first-time importers who want fewer moving parts to coordinate, at the cost of less control over carrier and routing choices.

Which one should I choose?

The right term depends less on the definitions than on your own logistics situation. Four questions settle most cases:

• Do you already work with a freight forwarder? If yes, FOB usually gives the lowest landed cost, since an established forwarder often gets better rates than a new customer would through any single exporter.
• Is this your first order from India? CIF reduces the moving parts on a first transaction: we handle freight and insurance, and you handle import clearance at your end.
• How much control do you want over routing and carrier? EXW gives the most control but needs the most logistics capability on your side, starting from our warehouse door.
• Do you already insure your cargo? CFR bundles freight into our price but leaves insurance to you, which suits a buyer whose marine cargo policy already covers all shipments regardless of origin.

You don't have to use the same term on every order. Many buyers start on CIF for a first shipment, then move to FOB once they have a forwarder relationship and want more control over freight cost.

Cash flow is a secondary factor. Under FOB and EXW you pay your carrier on your own schedule. Under CIF and CFR the freight is bundled into what you pay us, which can simplify budgeting even if it doesn't change the total landed cost much. Neither is better in itself; it depends on how your business prefers to time payments across a shipment.

What an Incoterm doesn't settle

An Incoterm governs shipping responsibility and the point where risk transfers. It doesn't set the product specification, the documentation requirements or the payment terms. Those are separate parts of the contract, and they decide whether you're happy with what arrives. Agree them in writing alongside the Incoterm — see payment options (LC, TT, CAD) and our Export Process for where each is fixed.

Shipping from Indian ports: what changes by term

Depending on product and destination, we load at Nhava Sheva (JNPT), Mundra, Chennai, Kolkata, Kochi, Visakhapatnam. A few India-specific points affect which term works best:

• Name the port, not just the term. "FOB" alone is incomplete. A quote reads "FOB Nhava Sheva" or "CIF Jebel Ali", and the named port decides the inland haul on our side and the sailing options on yours.
• The loading port follows the sourcing region. Nhava Sheva (JNPT) and Mundra handle most of our container volume. Chennai, Kolkata, Kochi and Visakhapatnam are used where they give a shorter inland leg from where the product is grown or processed, or a better sailing to your port. On FOB, your forwarder needs to book from the port we agree, not their default one.
• On FOB, your forwarder works to our cut-offs. Your booking has to line up with our stuffing, export clearance and the vessel's cut-off at the Indian port. Share your forwarder's contact early so the booking and our packing schedule are set together.
• Reefer cargo leaves less slack. Fresh produce and frozen seafood ship in temperature-controlled reefer containers. On FOB or EXW, the reefer booking and set temperature are your forwarder's to arrange, and a missed sailing affects shelf life, not just the delivery date.
• EXW still needs Indian export paperwork. Under EXW your forwarder handles export formalities in India, which relies on documents from us as the exporter. It works for buyers with an established Indian forwarder; for most others, FOB is the simpler way to keep control of the ocean leg.

For typical transit times by region and container types, see Logistics & Shipping.

Common mistakes when picking a term

• Comparing an FOB price with a CIF price directly. Add your own freight and insurance cost to the FOB figure before comparing, or the FOB offer will always look cheaper than it is.
• Assuming CIF means the seller carries the voyage risk. Under both FOB and CIF, risk passes to the buyer once the goods are loaded at the Indian port. CIF changes who arranges freight and insurance, not who bears the risk at sea.
• Choosing FOB without a forwarder. Booking ocean freight as a new, one-off customer can cost more than the exporter's arranged freight, which erases the reason for choosing FOB.
• Forgetting the destination-side costs. Under all four terms, import clearance, duties and delivery from your port to your warehouse stay with you. Budget for them whichever term you pick.
• Letting the Incoterm stand in for the contract. A clear Incoterm with a vague specification is still a vague contract. Specification, documents and payment need their own written terms.

Not sure? Tell us your destination port and whether you have an existing forwarder relationship when you request a quote, and we'll recommend a term. A supplier who ships your route regularly should give you a specific answer rather than a generic "it depends".