Three letters on a purchase contract — FOB, CIF, DAP — quietly decide thousands of dollars of cost and a surprising amount of risk. Incoterms (International Commercial Terms, published by the ICC and updated in the 2020 edition) are the global shorthand for who does what in a shipment: who packs, who clears export, who pays the ocean freight, who insures the cargo, and the exact point at which risk passes from seller to buyer. This guide explains the terms that matter for jute imports and how to choose between them.
A price is meaningless without an Incoterm. “$X per MT” FOB Chittagong and “$X per MT” CIF Antwerp are completely different deals. Always quote and compare on the same Incoterm.
How Incoterms work: cost vs. risk
Every Incoterm answers two separate questions, and they do not always have the same answer:
- Cost — up to which point does the seller pay the bills (inland haulage, export clearance, freight, insurance)?
- Risk — at which point does responsibility for loss or damage pass to the buyer?
For most terms these line up, but for the “C” terms (CFR and CIF) they famously do not — a trap we flag below.
The terms that matter for jute
EXW (Ex Works)
The seller simply makes the goods available at their premises. The buyer arranges and pays for everything else, including export clearance from Bangladesh. Maximum control for the buyer, maximum hassle — rarely used for first-time jute imports.
FCA (Free Carrier)
The seller clears the goods for export and hands them to the carrier (or at a named place). Increasingly recommended for containerised cargo because risk passes at a sensible point on land rather than “on board.”
FOB (Free On Board)
A maritime term: the seller delivers the goods on board the vessel at the port of shipment (e.g. Chittagong) and clears them for export. Risk passes once the goods are on board; the buyer arranges and pays the main ocean freight and insurance. The most common term for experienced buyers with their own freight forwarder.
CFR (Cost and Freight)
The seller pays the cost and freight to the destination port. But — critically — risk still passes at the origin port when the goods are on board. Insurance for the voyage is the buyer's responsibility.
CIF (Cost, Insurance and Freight)
Like CFR, plus the seller buys marine insurance for the voyage (minimum cover under Incoterms 2020). Risk still passes at origin. A popular all-in-to-port term for buyers who want a single number and minimal arranging.
DAP / DDP (Delivered)
Under DAP (Delivered At Place) the seller delivers to a named destination, ready for unloading; the buyer clears import and pays duties. DDP (Delivered Duty Paid) goes further — the seller even clears import and pays duties. Maximum convenience for the buyer, but you pay for it in the price.
Responsibilities at a glance
| Stage | EXW | FCA | FOB | CFR/CIF | DAP | DDP |
|---|---|---|---|---|---|---|
| Export packing | S | S | S | S | S | S |
| Inland to origin port | B | S | S | S | S | S |
| Export clearance | B | S | S | S | S | S |
| Main freight | B | B | B | S | S | S |
| Insurance | B | B | B | CIF: S | S | S |
| Import clearance | B | B | B | B | B | S |
| Duties & taxes | B | B | B | B | B | S |
The CFR / CIF trap
Under CFR and CIF the seller pays freight all the way to your destination port — but risk transfers back at the origin port the moment the goods are loaded. If the cargo is damaged mid-voyage on a CFR shipment, that is the buyer's loss, even though the seller booked the freight. This is why insurance matters: on CFR you must arrange your own, and on CIF the seller's policy is only minimum cover. For valuable consignments, consider topping up.
Which Incoterm should you choose?
- New to importing, want simplicity — CIF (one price to your port, basic insurance included)
- You have a trusted freight forwarder — FOB (control the freight, often the best total cost)
- Containerised cargo, want fair risk transfer — FCA
- You want it delivered to your door without touching logistics — DAP or DDP (at a premium)
Whichever you choose, the documentation behind it is the same disciplined set — see shipping jute from Bangladesh and our export process.
How the Incoterm changes your landed cost
The further along the chain the seller's responsibility runs, the higher the quoted unit price — but the fewer separate bills you handle yourself. To compare offers fairly you have to build them up to a common landed cost; we walk through exactly that in how to calculate the landed cost of jute imports.
Frequently asked questions
Which Incoterm do you usually quote?
We quote on FOB (Chittagong or Mongla), CFR or CIF as standard, and can arrange DAP for many destinations. Tell us your preference and destination port when you enquire.
Is FOB or CIF cheaper?
FOB unit prices look lower because freight and insurance are excluded — you pay those separately. On a true landed-cost basis, FOB is often cheaper if you have competitive freight rates; CIF can win on convenience and consolidated buying power.
Who handles customs at my end?
Under FOB, CFR and CIF, import clearance and duties are the buyer's responsibility — but we provide the full document set to make it straightforward. Only under DDP does the seller clear import.
Get a quote on your preferred terms
Tell us your destination port and preferred Incoterm and we will price it precisely. Request a quote or read the full import guide.
