FCA, FOB and CIF in Agricultural Commodity Trade

Incoterms® rules, published by the International Chamber of Commerce (ICC), define who does what between seller and buyer: who arranges and pays for transport, who insures the goods and at which point the risk passes. This guide covers the three terms most used in agricultural trade, in their 2020 version.

FCA — Free Carrier

The seller delivers the goods, cleared for export, to the carrier or other person nominated by the buyer at a named place. If that place is the seller's premises, the seller loads the goods. The buyer arranges and pays for the main carriage. FCA works for any mode of transport, which makes it a natural choice for goods moved in containers or by truck and rail.

FOB — Free On Board

The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The risk passes once the goods are on board. The buyer pays the sea freight and insures the cargo if it wishes. FOB is for sea and inland waterway transport only and is typical for bulk cargoes loaded at a port.

CIF — Cost, Insurance and Freight

The seller contracts and pays for carriage to the named port of destination and provides insurance. The risk still passes to the buyer once the goods are on board at the port of shipment, not at destination. The seller must obtain at least minimum insurance cover (Institute Cargo Clauses (C)) unless the parties agree otherwise. CIF is also for sea and inland waterway transport only.

Choosing between them

• For bulk shipments loaded onto a vessel, FOB and CIF are the usual terms.
• For containerised goods (bottled oil, oil in flexitanks, bagged sugar or flour), the ICC recommends FCA, CPT or CIP instead of FOB, CFR or CIF, because the goods are handed to a carrier before they are on board.
• If you prefer to control freight and shipping line selection, choose FCA or FOB. If you prefer the seller to arrange transport, choose CIF.

Rusbek Group quotes on FCA, FOB and CIF terms; other terms can be discussed for a specific contract.