FOB, CIF, DAP Explained — Trade Terms for Food Buyers

What Are Incoterms and Why Do They Matter?

Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international transactions — specifically who pays for shipping, insurance, and customs, and at what point risk transfers from seller to buyer.

For food trading, choosing the right Incoterm affects your total cost, risk exposure, and logistics planning. Here are the three most common terms used in the European sunflower oil trade.

FOB — Free on Board

What it means: The seller delivers the goods onto the shipping vessel at the port of origin. Once the goods are on board, all costs and risks transfer to the buyer.

Seller's responsibilities:

• Produce/source the product
• Transport to the port of origin
• Load onto the vessel
• Export customs clearance

Buyer's responsibilities:

• Arrange and pay for ocean/road freight
• Marine/cargo insurance
• Import customs clearance
• Transport from destination port to warehouse

Best for: Buyers who have their own logistics partners and can negotiate better freight rates. Common for experienced importers who want maximum control over shipping.

Example: You buy 20 tons of sunflower oil FOB Varna, Bulgaria at $1,100/ton. The oil is loaded onto a truck or vessel in Varna. You arrange transport to your warehouse in Munich. Your total cost = $1,100 + freight + insurance + import duties.

CIF — Cost, Insurance, and Freight

What it means: The seller pays for freight and insurance to the destination port. Risk transfers to the buyer once goods are on board at origin, but the seller covers costs to the destination.

Seller's responsibilities:

• Everything in FOB, plus:
• Arrange and pay for freight to destination port
• Minimum marine/cargo insurance (110% of invoice value)

Buyer's responsibilities:

• Import customs clearance
• Transport from destination port to warehouse
• Any additional insurance beyond minimum

Best for: Buyers who want a simpler process with fewer logistics to manage. The seller handles shipping, so you receive goods at your nearest port.

Example: You buy 20 tons CIF Rotterdam at $1,200/ton. The seller arranges delivery to Rotterdam port. You handle pickup from port to your warehouse. Your cost = $1,200 + port handling + local transport.

DAP — Delivered at Place

What it means: The seller delivers the goods to an agreed destination — typically the buyer's warehouse or a specified address. The seller bears all transportation costs and risks until delivery.

Seller's responsibilities:

• Everything in CIF, plus:
• Inland transport to the buyer's location
• All transit risks until delivery
• Transport insurance for the full journey

Buyer's responsibilities:

• Import customs clearance (in some cases)
• Unloading at the destination

Best for: Buyers who want a completely hassle-free experience. Especially popular with smaller importers or retailers who don't have logistics departments.

Example: You buy 20 tons DAP your warehouse in Berlin at $1,300/ton. The seller handles everything — from production in Bulgaria to delivery at your door in Berlin. Your cost = $1,300 + unloading.

Comparison Table

| Feature | FOB | CIF | DAP | |---------|-----|-----|-----| | Freight cost | Buyer | Seller | Seller | | Insurance | Buyer | Seller (minimum) | Seller | | Risk transfer | At origin port | At origin port | At destination | | Total control | Buyer has most | Shared | Seller has most | | Best for | Experienced importers | Standard trade | Small/new buyers | | Typical price difference | Base price | +$80-120/ton | +$150-250/ton |

Which Incoterm Should You Choose?

Choose FOB if:

• You import regularly and have established freight partners
• You want to control shipping routes and costs
• You're buying large volumes (100+ tons) and can negotiate freight

Choose CIF if:

• You want the seller to arrange shipping
• You're buying port-to-port and can handle inland transport
• It's your first time importing and you want simplicity

Choose DAP if:

• You want door-to-door delivery with no logistics hassle
• You're a retailer or small distributor without a logistics team
• You want a clear, all-inclusive price

How UB Market Handles Trade Terms

At UB Market, we offer all three Incoterms for sunflower oil and other food products:

• FOB Varna/Burgas — for buyers with their own logistics
• CIF any European port — we arrange reliable freight partners
• DAP your warehouse — complete door-to-door service across 12+ EU countries

We handle all documentation, certificates of origin, phytosanitary certificates, and customs paperwork.

Ready to discuss the best trade terms for your order? Request a quote and specify your preferred Incoterm — or ask us to recommend the most cost-effective option for your situation.