Incoterms for Seafood Exports Explained: FOB, CIF, CFR, EXW

Why Incoterms Matter for Every Seafood Contract

Every international seafood transaction lives or dies by its Incoterms. These three-letter codes — FOB, CIF, CFR, EXW, DAP, DDP — define exactly who pays for what, who takes risk when, and who handles which documents and formalities. Misunderstanding an Incoterm can turn a profitable deal into a loss, or leave a shipment stranded at a port with no one responsible for clearing it.

Published by the International Chamber of Commerce (ICC), Incoterms 2020 is the current edition used in international trade. This guide explains the most common Incoterms in seafood export, with practical advice for importers, distributors, and trade compliance teams on choosing the right term for their shipment.

What Incoterms Do — and Do Not — Cover

Incoterms define three things:

• Delivery point — where the seller must deliver the goods.
• Risk transfer — at what point risk of loss or damage passes from seller to buyer.
• Cost allocation — who pays for what between origin and destination.

Incoterms do not cover:

• Transfer of ownership or title (governed by the sales contract).
• Payment terms (L/C, T/T, documentary collection).
• Product specifications, warranties, or quality disputes.
• Dispute resolution or applicable law.

Always use Incoterms together with a clear sales contract that addresses these additional matters.

EXW — Ex Works

Under EXW, the seller makes the goods available at their premises (usually the factory or cold store) and has no further obligation. The buyer handles export clearance, loading, freight, insurance, import clearance, and delivery.

• Delivery point: seller's premises.
• Risk transfer: when goods are placed at the buyer's disposal.
• Seller pays: minimal (production and packaging).
• Buyer pays: everything else.

When to use: rare in seafood exports. Occasionally used for domestic buyers with in-country operations, or experienced trading houses with their own Thai logistics teams. Most Thai exporters prefer FCA (Free Carrier) over EXW because EXW legally places export clearance obligations on the buyer, which is often impractical.

FCA — Free Carrier

Under FCA, the seller delivers the goods to a named place (usually the carrier's terminal or inland depot) after completing export clearance. Risk transfers to the buyer when the goods are loaded onto the buyer's nominated carrier.

• Delivery point: named carrier location in the exporting country.
• Risk transfer: upon loading onto the buyer's carrier.
• Seller pays: export clearance, inland transport to named point.
• Buyer pays: main freight, insurance, import clearance, destination delivery.

When to use: when the buyer nominates the carrier and wants control of international freight but needs the exporter to handle Thai export procedures. Increasingly recommended by ICC over FOB for containerized cargo.

FOB — Free On Board

FOB is the most widely used Incoterm in seafood exports. The seller delivers the goods on board the vessel at the named port of shipment (e.g., FOB Laem Chabang). Export clearance is the seller's responsibility. Once the goods are loaded on board, risk and cost transfer to the buyer.

• Delivery point: on board the vessel at named port of shipment.
• Risk transfer: when goods are loaded on the vessel.
• Seller pays: production, packaging, export clearance, inland transport to port, terminal handling charges at origin (OTHC), vessel loading.
• Buyer pays: ocean freight, insurance, destination terminal handling (DTHC), import clearance, inland delivery.

When to use:

• When the buyer has a preferred freight forwarder or carrier contract.
• For large or experienced importers who want direct control over freight cost and routing.
• When the buyer wants to consolidate freight across multiple suppliers.

A note on FOB vs FCA: technically, Incoterms 2020 says FOB should be used only for bulk vessels or break-bulk, with FCA being the correct term for containerized cargo. In practice, the seafood industry still widely uses FOB for container shipments, and carriers understand this convention. When in doubt, clarify the delivery point in your contract.

CFR — Cost and Freight

Under CFR (sometimes called C&F), the seller delivers the goods on board the vessel and pays for the main carriage to the destination port. Risk transfers when goods are loaded on the vessel — the same as FOB — but the seller pays freight.

• Delivery point: on board the vessel at the origin port.
• Risk transfer: when goods are loaded on the vessel.
• Seller pays: everything under FOB plus ocean freight to destination port.
• Buyer pays: insurance, destination terminal handling, import clearance, inland delivery.

When to use: when the buyer wants the seller to arrange freight but prefers to arrange insurance independently (e.g., under an open marine cargo policy). Common for buyers in secondary markets where local insurance is preferred.

CIF — Cost, Insurance and Freight

CIF is the second most common Incoterm in seafood. The seller pays cost, freight, and minimum insurance to the destination port. Risk transfers at the origin port — same as FOB and CFR.

• Delivery point: on board the vessel at the origin port.
• Risk transfer: when goods are loaded on the vessel.
• Seller pays: everything under CFR plus marine cargo insurance.
• Buyer pays: destination terminal handling, import clearance, inland delivery.

Under Incoterms 2020, CIF requires only minimum insurance coverage (Institute Cargo Clauses C) — essentially covering named perils. For high-value or temperature-sensitive cargo like frozen seafood, buyers should request upgraded coverage (Institute Cargo Clauses A — all risks) or purchase supplementary insurance.

When to use:

• Small and medium importers who prefer a landed cost quotation at destination port.
• Letters of credit that require the seller to arrange and present insurance documents.
• New trading relationships where the seller's expertise simplifies logistics for the buyer.

DAP — Delivered at Place

Under DAP, the seller delivers the goods to a named destination (such as the buyer's warehouse or a named inland depot), ready for unloading. The seller bears all costs and risks to that point, except import duties and taxes.

• Delivery point: named place in the destination country.
• Risk transfer: at the named destination, ready for unloading.
• Seller pays: freight, insurance, destination terminal handling, inland transport.
• Buyer pays: unloading at destination, import duties, VAT/GST.

When to use: for premium service shipments, buyers without customs brokerage capability, or programs where the exporter manages delivered cost to warehouse.

DDP — Delivered Duty Paid

DDP places maximum responsibility on the seller. The seller delivers the goods at the named destination with all duties, taxes, and formalities paid.

• Delivery point: named place in the destination country, duty paid.
• Risk transfer: at the named destination.
• Seller pays: everything including import duties and VAT.
• Buyer pays: only unloading at destination.

When to use: rare in seafood exports due to the complexity of foreign import duty payment and VAT registration. Occasionally used for e-commerce or private label programs where the brand wants a simple landed cost.

Risk Transfer Comparison

Understanding when risk transfers is the most important decision when choosing an Incoterm:

• EXW: at seller's premises (buyer bears nearly all transport risk).
• FCA: when loaded onto buyer's carrier in exporting country.
• FOB, CFR, CIF: when goods cross the ship's rail at origin port.
• DAP, DDP: at named destination in importing country.

For frozen seafood, this risk question is crucial. If a reefer container experiences a temperature excursion mid-voyage, who bears the loss? Under FOB/CFR/CIF, the buyer does (even though the seller arranged freight under CFR/CIF). Under DAP/DDP, the seller does. Insurance should be structured accordingly.

Insurance Considerations

Marine cargo insurance for frozen seafood must address:

• All risks coverage (Institute Cargo Clauses A) — broader than the minimum required under CIF.
• Refrigeration machinery breakdown — not automatically included; must be specifically endorsed.
• Temperature variation clause — covers damage from cold chain failure.
• Rejection insurance — covers financial loss if the shipment is rejected at destination for regulatory reasons.
• Coverage value — typically CIF value plus 10% to cover customs duties, inland transport, and anticipated profit.

Documentation Responsibilities by Incoterm

• EXW / FCA: buyer handles export declaration (EXW) or seller handles (FCA). Buyer obtains import documents.
• FOB: seller handles export declaration and provides clean on-board B/L. Buyer obtains import documents.
• CFR / CIF: seller provides commercial invoice, packing list, B/L, health certificate, catch certificate (for EU), and (for CIF) insurance certificate. Buyer handles import.
• DAP / DDP: seller provides all export documents plus manages import clearance (DDP).

For a complete documentation checklist, visit our export documentation page.

Choosing the Right Incoterm

Consider these factors:

• Experience level — New importers often prefer CIF for simplicity. Experienced importers prefer FOB for cost control.
• Freight contracts — If you have preferential freight rates, use FOB and book your own freight.
• Volume — Large volumes benefit from FOB and direct carrier contracts. Small volumes may be simpler under CIF.
• Risk tolerance — If you want risk to stay with the seller until destination, use DAP or DDP.
• Payment terms — Letters of credit often specify CIF for document control. T/T arrangements are flexible.
• Destination — Some markets have complex import procedures that argue for DAP or DDP.

Common Incoterm Mistakes

• Not specifying the named place — FOB, CIF, DAP all require a named port or destination. "FOB Thailand" is ambiguous; "FOB Laem Chabang" is correct.
• Using outdated Incoterms — Always reference "Incoterms 2020" explicitly in the contract.
• Confusing DAT with DPU — DAT was replaced by DPU (Delivered at Place Unloaded) in Incoterms 2020.
• Assuming insurance under CIF is adequate — The default minimum coverage is usually insufficient for frozen seafood.
• Mixing Incoterms with payment terms — They are separate agreements; document both clearly.

Work with an Exporter Experienced in Every Incoterm

Hanuman Seafood has shipped frozen seafood to over 40 countries under every common Incoterm. Whether your program calls for FOB Laem Chabang, CIF Rotterdam, or DAP New Jersey, our export team can structure a competitive quotation and the right documentation package.

Contact our export team to discuss your preferred trading terms and shipping requirements. Visit our logistics page for more information on ports, transit times, and freight options.