Carob Export with Incoterms: FOB, CIF, EXW
What a price offer means in carob exports largely depends on the mode of delivery. There is a significant difference between the ex-factory delivery price for the same product and the price including freight and insurance to the destination port. The rules defining this difference and the responsibilities of the parties are the Incoterms rules published by the International Chamber of Commerce.
In this article, we discuss what Incoterms are, the most commonly used delivery methods in carob exports, such as EXW, FCA, FOB, CFR, CIF, and DAP, and the cost, risk, and document responsibilities of the buyer and seller in each.
What Are Incoterms?
Incoterms (International Commercial Terms) are a set of rules consisting of eleven three-letter trade terms, first published by the International Chamber of Commerce (ICC) in 1936, reflecting business-to-business practice in contracts for the purchase and sale of goods. According to the ICC, these rules are used in both international and domestic trade contracts, are recognized by the United Nations Commission on International Trade Law (UNCITRAL) as the global standard for interpreting common terms in foreign trade, and aim to avoid costly misunderstandings by clarifying the duties, costs, and risks involved in the delivery of goods from seller to buyer. The latest version of the rules is Incoterms 2020 (ICC).
Studies conducted in Turkey also deal with the issue in detail. A master's thesis examining the historical development of delivery methods and their practices in Turkey states that the changes made in Incoterms arise from the needs of changing commercial practices and conditions; however, the basic features of delivery methods that have been used for centuries, such as EXW, FOB and CIF, remain the same (Çetin, 2019). An article examining the transition of damage in the Incoterms 2020 rules from a legal perspective also draws attention to the importance of these rules for the parties to the international sales contract regarding the transition of damage (Çalışkan, 2021).
Incoterms rules answer three key questions:
- Where and when is the seller deemed to have delivered the goods?
- At what point does the risk of damage and loss on the goods pass to the buyer?
- Who pays for transportation, insurance, customs and other costs?
Incoterms rules focus on the distribution of duties, costs and risks related to delivery. For this reason, it is recommended that issues such as payment terms, transfer of ownership, product quality and specification, or provisions to be applied in case of breach of contract should be regulated separately and explicitly in the sales contract.
Carob trade is a trade that operates on an international scale. According to FAOSTAT data, approximately 32,872 tons of carob were exported worldwide in 2024. According to FAO's assessment of Morocco, Morocco exports approximately 13 thousand tons of carob seeds annually, mainly to Europe. It is reported that seed processors in Portugal export to China, Japan and the USA as well as Europe. IndexBox's market analysis for 2020 also shows Morocco, Spain and Algeria among the main exporters for 2018, and Italy, Switzerland and Spain among the main importers. On so many different routes, choosing the right delivery method is decisive in terms of both cost and risk management.
Grouping of Incoterms 2020 Rules
There are 11 rules in Incoterms 2020 and they are divided into two groups according to the mode of transport:
| Group | Rules |
|---|---|
| For all modes of transport | EXW, FCA, CPT, CIP, DAP, DPU, DDP |
| For sea and inland waterway transport only | MOROCCO, FOB, CFR, CIF |
The most common rules in carob exports are EXW, FCA, FOB, CFR, CIF, and DAP. Below, we discuss them in order of increasing seller responsibility from seller to buyer.
Frequently Used Rules in Carob Export
EXW: Delivered at Work
EXW (Ex Works) is the rule for which the seller assumes the least responsibility. The seller is considered to have delivered the goods when they make them available for the buyer's use at their premises or at a designated location.
- Seller: Keeps the goods packaged and ready for delivery
- Consignee: Loading, inland transportation, export customs clearance, freight, insurance and all transactions in the destination country
- Risk: The goods are transferred to the buyer as soon as they are made available to the buyer
Although EXW may seem simple on paper, it can cause some problems in international sales. According to the rule, export customs procedures belong to the buyer; it should be clarified in advance how a buyer abroad will carry out export transactions in Turkey. In addition, according to the rule, the loading of the vehicle is not the responsibility of the seller; in practice, if the seller will do the loading, it is useful to specify this in the contract. Due to these uncertainties, it may be considered to consider FCA instead of EXW in export sales.
FCA: Hand Over to Carrier
FCA (Free Carrier) is the rule by which the seller delivers the goods to the carrier designated by the buyer at the agreed place. If the delivery location is the seller's facility, the seller loads the goods onto the carrier's vehicle; elsewhere, the goods are made available to the carrier ready for unloading.
- Seller: Performs export customs clearance, delivers the goods to the carrier at the designated place
- Buyer: Main carriage, insurance and transactions in the destination country
- Risk: Passes to the buyer when the goods are handed over to the carrier
FCA can be considered as an alternative to FOB for containerized shipments. Most of the time, container loads are delivered at the port terminal or the seller's facility before being loaded onto the ship; when using FOB, the risk only passes when the goods are loaded onto the ship. Therefore, the contract should clearly consider who is responsible for any damage that may occur while waiting at the terminal.
The ICC revised the FCA rule in Incoterms 2020 for cases where the buyer, seller or bank requires an on-board bill of lading when goods to be transported by sea are sold with FCA. Accordingly, the parties may agree that the buyer instructs the carrier to issue a bill of lading to the seller after the goods are loaded onto the ship and that the seller presents this document to the buyer (often through banks) (ICC). This regulation facilitates the use of FCA in letter of credit payments.
FOB: Delivered on Board
FOB (Free On Board) is one of the delivery methods that has been used for centuries and whose basic features have not changed (Çetin, 2019). The seller is deemed to have delivered the goods when he loads them on the ship determined by the buyer at the agreed loading port.
- Vendor: Export customs clearance, transportation to loading port and loading on ship
- Buyer: Sea freight, insurance, charges at the destination port, import handling
- Risk: Goods pass to the buyer when loaded onto the vessel
In FOB, the buyer can use their own freight agreements because the buyer arranges the freight. For the seller, the responsibility ends when the goods are loaded onto the vessel at the port of loading.
CFR: Cost of Goods and Freight
In the CFR (Cost and Freight) rule, the seller loads the goods onto the ship and pays the sea freight up to the destination port. However, the risk passes to the buyer when the goods are loaded onto the ship at the port of loading, as in FOB.
- Vendor: Export handling, loading on ship and freight to destination port
- Buyer: Marine insurance (optional), costs at the destination port, import processing
- Risk: Passed to the buyer when the goods are loaded onto the vessel at the port of loading
The point to be noted in CFR is that the place where the expense passes and the place where the risk passes are different. Although the seller pays the freight, the risk during the sea voyage belongs to the buyer. Therefore, it is recommended that the buyer insure the goods himself.
CIF: Cost of Goods, Insurance and Freight
CIF (Cost, Insurance and Freight) requires the seller to have insurance for sea travel in addition to CFR. ICC states that CIF is a rule reserved for maritime trade and is frequently used in commodity trade (ICC).
- Vendor: Export handling, loading on board, freight and insurance to the destination port
- Buyer: Costs at the destination port and import processing
- Risk: Passed to the buyer when the goods are loaded onto the vessel at the port of loading
In CIF, the risk is transferred to the buyer at the port of loading. According to the ICC's statement, the default coverage level for CIF in Incoterms 2020 remains Institute Cargo Clauses (C); the parties can agree on a higher coverage. The CIP rule, on the other hand, now requires a higher coverage (ICC) that complies with the Institute Cargo Clauses (A) or similar terms. The buyer who wants wider coverage must clearly state this in the CIF contract.
DAP: Delivered at Designated Place
In the DAP (Delivered at Place) rule, the seller transports the goods to the agreed place in the destination country and is deemed to have delivered the goods when they are made available to the buyer in a state ready for unloading.
- Seller: All transportation and risk to the designated destination
- Buyer: Unloading, import customs clearance, taxes and duties
- Risk: Passed on to the buyer when the goods are made available to the buyer at the destination
According to the ICC, the only difference between DAP and DPU is unloading: in DAP, the seller does not unload the goods, while in DPU, which replaced the old DAT in Incoterms 2020, unloading belongs to the seller (ICC). DAP can be considered when the buyer wants to deal with less logistical work. For the seller, it means bearing all the risk during transportation. DDP is the rule that import duties and customs clearance also belong to the seller; however, DDP is less desirable in practice because it requires the seller to handle import operations in a foreign country.
Comparative Summary
| Rule | Export customs | Main freight | Insurance | Where the risk passes |
|---|---|---|---|---|
| EXW | Receiver | Receiver | Receiver | Seller's facility |
| FCA | Seller | Receiver | Receiver | Delivery point to the carrier |
| FOB | Seller | Receiver | Receiver | On board at the loading port |
| CFR | Seller | Seller | Receiver | On board at the loading port |
| CIF | Seller | Seller | Seller (minimum guarantee) | On board at the loading port |
| DAP | Seller | Seller | Seller's own risk | At the destination |
When Choosing a Delivery Method for Carob Export
The choice of delivery method in carob products affects not only the cost but also the quality management.
Where quality and risk pass
Products such as carob powder, shards and kernels are sensitive to moisture and temperature changes. Condensation can form inside the container on long sea voyages. The mode of delivery determines who is at risk when such damage occurs. In FOB, CFR and CIF, it is especially important to document the quality status at the time of loading, as the risk passes to the buyer at the port of loading.
At this point, sampling and analysis play a critical role. Scientific studies on mycotoxin sampling in foods show that sampling is one of the most important sources of variability in analysis results. Taking samples representing the batch during loading, checking the loading by an independent inspection company when necessary, and storing witness samples protect the parties in disputes that may arise later.
Documents
The mode of delivery also affects which documents are issued and by whom. For example, in CIF, the seller is obliged to present the insurance policy or certificate to the buyer. In FOB and CFR, the insurance document is not included in the seller's document set. In letter of credit payments, it is essential that the documents required are compatible with the delivery method for the payment to be made smoothly.
Correct naming
The Incoterms rule should always be used with a place name. "FOB" alone is an incomplete expression; the correct usage should be like "FOB Mersin Port, Incoterms 2020". The clearer the delivery location is defined, the clearer the point where the cost and risk pass.
Common Mistakes
- Using the rule without specifying a place name and Incoterms version
- Habitually using FOB for container shipments without ever considering the FCA option
- Assuming that the risk in CFR and CIF passes at the port of destination
- Assuming that the minimum insurance in CIF covers every risk
- Not clarifying who has the export customs clearance in EXW
- Directly compare offers in different delivery modes
Frequently Asked Questions
What is the difference between FOB and CIF? In FOB, freight and insurance are borne by the buyer, while in CIF, the seller is borne by the buyer. However, in both rules, the risk passes to the buyer when the goods are loaded onto the vessel at the port of loading.
Which delivery method is most suitable for carob exports? There is no single right answer. The buyer's freight possibilities, whether the shipment is made by container, the payment method and the risk preferences of the parties are decisive. FCA should also be evaluated in container shipments; FOB and CIF are rules that have been used in maritime trade for a long time.
Is EXW suitable for export? It can be used; however, since export customs procedures belong to the buyer, it should be clarified in advance how these procedures will be carried out. Alternatively, FCA can be considered.
Do Incoterms specify payment terms? Incoterms rules focus on clarifying the duties, costs, and risks associated with delivery. Payment terms and transition of ownership must be further established in the sales contract.
Choosing a Delivery Method with Carob Türkiye
The right delivery method in carob exports is the key to managing both cost and risk correctly. As Carob Türkiye, we supply carob fruit, cracks, flour/powder, seeds and extracts. Our products Our Products page, for your wholesale and export requests, with your preferred delivery method and destination. Contact Now You can contact us on our page.
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