FAQ: What are the best Incoterms in the metal trade?

Our customers ask us repeatedly what would be the best Incoterms in the stainless steel and metal trade for them. We would like to answer this question for you here. And we present the three most important and best Incoterms.

Which Incoterms are mainly used in international metal trade?

Incoterms (short form of International Commercial Terms) are standardized contract clauses. Incoterms are mainly used in import and export. They are continuously adapted. The International Chamber of Commerce drew up the first Incoterms in 1936.

We have listed and explained the three most important Incoterms (FOB, CIF, DAP) in trade with stainless steel and other metal products.

All Incoterms in the overview can be found e.g. here at Wikipedia.

Incoterms CIF: Cost, Insurance and Freight

What is the Incoterm CIF?

In the case of CIF (Cost, Insurance and Freight), the seller delivers the goods cleared for export on board the vessel at the port of shipment. Pays for the transport of the goods to the port of destination. And also purchases and pays the minimum insurance cover for the goods during the voyage to the named port of destination.

How is the risk shared?

The purchaser bears the entire risk as soon as the goods are on board the vessel for the main transport. However, he does not bear any costs until the cargo arrives at the named port of destination. The purchaser is responsible for the costs of import clearance and customs duties.

What is the coverage of CIF?

CIF only applies to sea or inland waterway transport. It is usually used for bulk, oversized or overweight shipments.

What does the insurance cover look like?

The seller is obliged to take out insurance for the purchaser, but only for minimum cover.

What are the CIF Incoterm obligations?

Obligations of the seller

• Goods, commercial invoice and documentation
• Export packaging and labelling
• Export licences and customs formalities
• Pre-carriage and delivery
• Charges
• Delivery at designated port of destination
• Proof of service
• Costs of inspection before shipment
• Minimum insurance cover

Obligations of the purchaser

• Payment for goods as specified in the contract of sale
• Unloading and onward carriage
• Import formalities and customs duties
• Costs of import clearance prior to transit control

Incoterms FOB: Free on Board

What is the Incoterm FOB?

Under the conditions of FOB (abbreviation for “free on board”) the seller clarifies the goods for export. And ensures that it is delivered to the ship at the named port of departure and loaded onto the ship for transport.

How is the risk distributed?

The purchaser assumes the risk and the costs. Including import clearance and customs duties as soon as the goods are loaded onto the transport ship at the port of departure.

What is the FOB coverage?

FOB only applies to sea or inland waterway transport. As such, the named place is always a port. It does not apply if the main transport is by air, land or rail.

This term is usually used for bulk goods (such as oil or grain) or freight from Asia.

How is the risk distributed?

The seller pays all costs up to the main transport. Then the purchaser assumes full responsibility for the costs.

What are the obligations with FOB Incoterm?

Obligations of the seller

• Goods, commercial invoice and documentation
• Export packaging and labelling
• Export licences and customs formalities
• Pre-carriage and delivery
• Charges
• Delivery on board the vessel at the named port of shipment
• Proof of service
• Costs of inspection before shipment

Obligations of the purchaser

• Payment for goods as specified in the contract of sale
• Main transport
• Unloading and onward carriage
• Import formalities and customs duties
• Costs of inspection before shipment (for import clearance)