Seafood Import: Payment Terms & Incoterms Explained
FOB, CIF, T/T, L/C — a plain-English guide to every trade term used in frozen seafood importing, with practical advice on which combination to choose.
When you import frozen seafood, two sets of terms govern the transaction: Incoterms (who pays freight, insurance, and handles customs) and payment terms (when and how you transfer money). Choosing the wrong terms can cost you thousands in unexpected charges or leave you exposed if something goes wrong at sea. This guide explains every term you will encounter and tells you which combination works best for different buying situations.
Part 1: Incoterms for Frozen Seafood
FOB — Free On Board
Seller loads cargo into the reefer container and handles export customs. From that point, all risk and cost (ocean freight, insurance, destination charges) transfers to the buyer.
Buyer pays:
- • Ocean reefer freight
- • Marine insurance
- • Destination port charges
- • Import customs & duties
- • Cold storage at destination
Seller pays:
- • Export packaging
- • Export customs clearance
- • Reefer plug charges at origin port
- • Loading onto vessel
Best for: Buyers with an established freight forwarder who want cost transparency and control over shipping.
CIF — Cost, Insurance & Freight
Seller pays ocean freight and arranges minimum marine insurance to your named destination port. Risk transfers to buyer once cargo is loaded at origin port — even though seller handles freight.
Buyer pays:
- • Destination port charges
- • Import customs & duties
- • Cold storage at destination
Seller pays:
- • Ocean reefer freight
- • Minimum insurance (ICC C)
- • Export clearance
Caution: CIF insurance is minimum coverage — consider upgrading to All Risk (ICC A) or buying your own policy. Best for: Buyers new to seafood importing who don't yet have a freight forwarder.
DAP / DDP — Delivered at Place / Delivered Duty Paid
DAP: Seller delivers to your warehouse or named location; buyer handles import customs and duties.
DDP: Seller handles everything including import duties and delivers to your door.
Important: DDP is the most expensive option — sellers mark up every cost by 15–25%. Only use DDP if you have no import infrastructure at all. With most established Thai exporters, FOB or CIF is a better deal.
Part 2: Payment Terms
T/T — Telegraphic Transfer (Bank Wire)
Standard wire transfer direct from buyer's bank to seller's bank. Fast (1–3 days), low fees.
| Structure | When Used |
|---|---|
| 30% deposit + 70% on copy B/L | Most common for established relationships |
| 50% + 50% on copy B/L | New supplier relationship, first orders |
| 100% prepayment | Very small orders only — avoid on large shipments |
| Open account net 30/60 | Long-term buyers with payment history only |
L/C — Letter of Credit
Your bank guarantees payment to the seller when they present compliant shipping documents. The safest payment method for both parties on large orders.
Use L/C when:
- • Order value exceeds USD $80,000
- • New supplier, no track record
- • Your market requires L/C for bank financing
- • Country has currency restrictions
L/C costs:
- • Bank issuance fee: 0.5–1.5% of L/C value
- • Confirmation fee (if requested): 0.5–1%
- • Amendment fees if terms change: $50–$150 each
- • Total: typically $500–$2,000 per shipment
Which Combination Is Right for You?
| Your Situation | Recommended Terms |
|---|---|
| First order, new supplier | FOB Bangkok + 50% T/T deposit + 50% T/T against copy B/L |
| Established supplier relationship | FOB + 30/70 T/T |
| Large order (>$80k), new supplier | CIF + Irrevocable L/C at sight |
| No freight forwarder yet | CIF + 30/70 T/T |
| Bulk buyer, regular shipments | FOB + open account net 30–60 days |
| Government or aid procurement | CIF + confirmed L/C |
5 Common Mistakes to Avoid
Paying 100% upfront on first order
No reputable exporter demands full prepayment. This is a red flag for scams. Always negotiate a split.
Using CIF without upgrading insurance
CIF standard insurance (ICC C) covers only catastrophic losses — not temperature excursions, theft, or partial losses. Buy All Risk (ICC A) or add a rider.
Not specifying reefer temperature on B/L
Always request that the B/L and reefer booking confirm -18°C set point. Reefer failures without documentation make claims very difficult.
Ignoring L/C document requirements
Tiny discrepancies (a misspelled port, wrong date format) allow banks to reject documents and delay payment. Review L/C terms carefully with your supplier.
Contracting in local currencies
Use USD for all seafood contracts. Thai Baht or local currency contracts expose both parties to forex risk. If you must use local currency, include an exchange rate clause.
Questions About Your First Seafood Order?
Hanuman Seafood's export team handles both FOB and CIF shipments and can walk you through the entire payment process for your first container. We've shipped to 50+ countries and know the documentation requirements for your market.
Talk to Our Export Team