When you ask an exporter for a green coffee price, the number on its own tells you very little. Two quotes for the same coffee can look far apart simply because one includes ocean freight and insurance and the other does not. The difference comes down to the Incoterm attached to the price. In this guide we explain the terms you will see most often when buying green coffee, especially FOB and CIF, so you can compare quotes fairly and choose the arrangement that suits your business.
This is general information to help you ask the right questions. It is not legal, customs or insurance advice. For your specific route, check with your freight forwarder or customs broker.
What Incoterms are
Incoterms are standard trade terms published by the International Chamber of Commerce (ICC). The current edition is Incoterms 2020. Each term is a short three-letter code that defines three things: which party pays for each part of the journey, where the goods are handed over, and the point at which risk of loss or damage passes from seller to buyer. Incoterms do not cover the price itself, payment terms or who owns the goods. Those belong in the sales contract.
Some Incoterms work for any type of transport. Others, including FOB and CIF, are meant for sea and inland waterway shipping, which is how most green coffee moves.
FOB: Free On Board
Under FOB, the seller is responsible for getting the coffee cleared for export and loaded on board the vessel at the named port of shipment. The quote is written with that port, for example "FOB Douala" for Cameroon coffee, "FOB Santos" for Brazil, "FOB Cartagena" or "FOB Buenaventura" for Colombia, "FOB Ho Chi Minh City" for Vietnam or "FOB Djibouti" for Ethiopian coffee, which is exported through Djibouti.
The seller covers: packing, transport to the port, export clearance and loading onto the ship.
The buyer covers: ocean freight, marine insurance, unloading at the destination port, import clearance, duties and delivery to the warehouse.
Risk passes to the buyer once the coffee is on board the vessel at origin.
FOB suits buyers who already have a freight forwarder, ship regularly, or want to control which shipping line and insurance policy they use. Because FOB prices exclude freight, they are also the easiest way to compare the coffee itself across different exporters at the same origin.
CIF: Cost, Insurance and Freight
Under CIF, the seller does everything in FOB and also books and pays for the ocean freight and a minimum level of marine insurance to the named destination port. A CIF quote names that port, for example "CIF Long Beach", "CIF Port Klang" or "CIF Mombasa".
The seller covers: everything in FOB, plus ocean freight and minimum insurance to the destination port.
The buyer covers: unloading and handling at the destination port, import clearance, duties and onward delivery.
Risk still passes to the buyer when the coffee is loaded on board at origin, not when it arrives. This surprises many first-time importers. The seller pays for the freight and insurance, but if something goes wrong at sea, it is the buyer who claims on the insurance policy.
Under Incoterms 2020, the minimum insurance required for CIF is relatively basic cover. Many buyers ask for wider cover or arrange their own additional policy, which is worth discussing when you request a quote.
CIF is popular with buyers who are new to importing, buy occasionally or do not yet have a freight forwarder, because it gives one price that covers the coffee to their own port.
Other terms you may see
- EXW (Ex Works): the buyer collects from the seller's premises and handles everything after that, including export clearance. It is rarely practical for an overseas buyer without an agent at origin.
- FCA (Free Carrier): the seller clears the coffee for export and hands it to the buyer's carrier at a named place, such as a warehouse or container terminal. The ICC recommends FCA over FOB for containerised cargo because containers are usually handed over at a terminal before loading.
- CFR (Cost and Freight): the same as CIF, but without insurance. The buyer arranges their own cover.
- DAP (Delivered at Place): the seller delivers to a named place in the buyer's country, ready for unloading. The buyer handles import clearance and duties.
- DDP (Delivered Duty Paid): the seller delivers to the named place and also handles import clearance and duties. It is the most work for the seller and the simplest for the buyer.
How to compare FOB and CIF quotes
To compare an FOB quote with a CIF quote fairly, add to the FOB price what you would pay for freight and insurance on the same route. Your freight forwarder can give you that figure. Then, for either term, add your destination costs: port handling, customs brokerage, any duties and taxes, and trucking to your warehouse. That landed cost is the number that really matters.
A few other points to keep in mind:
- Container type and quantity: freight for a full container is priced very differently from a shared, less-than-container (LCL) shipment. Our order quantities and container guide explains the options.
- Transit time and transhipment: some routes stop at hub ports along the way. Ask how long the voyage takes, since green coffee is sensitive to heat and humidity.
- Insurance cover: check what the policy covers and who holds it.
- Documents: make sure the quote states which documents come with the shipment, such as the bill of lading, certificate of origin and phytosanitary certificate.
Which term should you choose?
There is no single right answer. As a rule of thumb:
- Choose FOB or FCA if you have a freight forwarder, ship often or want control over the shipping line and insurance.
- Choose CIF or CFR if you are new to importing or want one price to your port.
- Ask about DAP or DDP if you want the coffee delivered to your door, and confirm who handles customs.
Whichever you choose, make sure the Incoterm, the named place and the Incoterms edition (for example "CIF Long Beach, Incoterms 2020") are written in your contract.
How we quote green coffee
At All Coffee & Coffee Machines Inc we quote each inquiry individually, and you can tell us which term you prefer. We supply Cameroon Robusta, Cameroon Arabica, Brazil Arabica, Colombia Arabica, Vietnam Robusta and Ethiopia Arabica, and we accept any order quantity. If you are not sure which term fits, tell us your destination and volume, and we will explain the options.
New to importing? Read our step-by-step guide to importing green coffee. Buying regularly? See our wholesale and trade accounts page.
Request a quote through the wholesale green coffee quote form, visit our contact page, or email contact@allcoffeemach.com.