Introduction

In an import or export operation, choosing the Incoterm is a strategic decision.

Incoterms (International Commercial Terms) define seller and buyer responsibilities regarding:

  • transport;
  • insurance;
  • customs formalities;
  • risks;
  • logistics costs.

A poor choice can generate additional costs or misunderstandings between parties.

Why are Incoterms important?

Incoterms clearly define:

  • Who pays what?
  • Who organizes transport?
  • When is risk transferred?
  • Who handles customs formalities?

Mastering them is essential to secure any international operation.

FOB (Free On Board)

Principle

The seller handles:

  • preparation of the goods;
  • transport to the port of loading;
  • export customs formalities;
  • loading on board the vessel.

Once the goods are loaded, risks transfer to the buyer.

Practical example

A Senegalese company exports sesame to China with final destination at Qingdao port under FOB Dakar.

The exporter handles:

  • goods preparation;
  • transport to Dakar Port;
  • export formalities;
  • loading on board.

The Chinese importer then organizes:

  • maritime freight;
  • possible insurance;
  • import customs clearance;
  • final delivery.

This structure is very common for sesame, peanuts and cashew nuts destined for Asian markets.

Key takeaway

In many FOB exports, maritime freight is negotiated and paid by the buyer at destination.

CIF (Cost, Insurance and Freight)

Principle

The seller handles:

  • transport to the departure port;
  • export formalities;
  • maritime freight;
  • transport insurance.

The buyer then handles import customs clearance and local distribution.

Practical example

A Senegalese company exports fresh mangoes to Europe under CIF Rotterdam.

The exporter organizes:

  • transport to Dakar Port;
  • export formalities;
  • maritime freight;
  • insurance.

The importer receives the goods at Rotterdam port and then manages local formalities.

Why choose CIF?

CIF allows the buyer to know a large part of the logistics cost in advance.

DDP (Delivered Duty Paid)

Principle

The seller assumes maximum responsibility.

They handle:

  • international transport;
  • insurance;
  • export formalities;
  • import formalities;
  • duties and taxes;
  • final delivery.

When is DDP used?

  • International e-commerce: delivery with all taxes included.
  • Medical equipment: direct delivery to laboratories or hospitals.
  • Urgent spare parts: to limit production downtime.
  • Trade shows and exhibitions: simplified on-site delivery.
  • Luxury products: full control of the logistics chain.

Point of caution

DDP requires excellent control of:

  • customs regulations;
  • local taxes;
  • destination country procedures.

Preferred Incoterms for industrial and oversized projects

Industrial projects often require a different approach.

FCA (Free Carrier)

The seller hands the goods over to the carrier designated by the buyer.

Very suitable for complex multimodal operations.

FOB (Free On Board)

Often used for:

  • electrical transformers;
  • mining equipment;
  • construction machinery;
  • heavy industrial equipment.

DAP (Delivered At Place)

The seller organizes transport to the agreed site.

The buyer remains responsible for:

  • import customs clearance;
  • duties and taxes.

DAP is often an excellent alternative to DDP.

EXW (Ex Works)

The buyer takes responsibility for the entire logistics chain from the factory exit.

It is mainly used by companies with strong logistics expertise.

How to choose the right Incoterm

The choice depends on:

  • your international trade experience;
  • your ability to manage transport;
  • the level of control you want;
  • your budget;
  • your client's or supplier's requirements.

Each operation has its own specificities.

NSG support

NSG supports clients with:

  • commercial contract analysis;
  • Incoterm selection;
  • transport organization;
  • customs clearance;
  • coordination of international operations.

Our objective is to help you choose the solution best suited to your activity and markets.

Do you have an import or export project?

The NSG team is available to analyze your operation and guide you toward logistics solutions adapted to your commercial objectives.