FOB and CIF are Incoterms® rules used to allocate delivery tasks, costs and risks between seller and buyer. They do not, by themselves, define product quality, payment timing, title transfer or every term of the sales contract.
Importers should name the exact port and version of the rule in the quotation and contract, for example: “FOB [named Indonesian port], Incoterms® 2020.”
FOB in brief
Under FOB, the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. Risk transfers when the goods are on board. The buyer arranges and pays for the main ocean carriage and normally controls the freight booking.
FOB is a sea and inland-waterway rule. The International Chamber of Commerce notes that FCA should be considered when goods are handed to a carrier before they are loaded on board, as commonly occurs with containerized shipments.
CIF in brief
Under CIF, the seller arranges and pays the cost of carriage to the named destination port and obtains the insurance required by the rule. However, the transfer of risk does not wait until destination: risk transfers when the goods are on board the vessel at the shipment port.
This distinction is important. “Seller pays freight” does not mean “seller carries all transit risk until arrival.” The ICC also explains that CIF’s default insurance obligation is limited cover. Buyers requiring broader cover should agree it expressly.
FOB and CIF comparison
| Question | FOB | CIF |
|---|---|---|
| Main freight booking | Buyer | Seller |
| Main freight cost included in seller’s price | No | Yes |
| Seller-provided cargo insurance | No automatic obligation under FOB | Required at the rule’s specified level |
| Risk transfer | When goods are on board at the named shipment port | When goods are on board at the shipment port |
| Named location | Port of shipment | Port of destination |
| Transport mode | Sea or inland waterway | Sea or inland waterway |
The parties should consult the complete Incoterms® 2020 rules and obtain professional advice for their contract and destination requirements.
Why buyers may prefer FOB
FOB may suit an experienced importer that already works with a freight forwarder and wants control over carrier selection, sailing schedule and freight negotiation.
Before accepting an FOB quotation, confirm:
- the named Indonesian loading port;
- which origin charges are included;
- who nominates the vessel and by what deadline;
- documentation and cut-off responsibilities;
- container, packaging and loading assumptions;
- treatment of delays or changes outside the agreed scope.
PT DAN publishes FOB as available when applicable, subject to production location and shipping arrangements.
Why buyers may request CIF
CIF can give the buyer a combined goods, freight and insurance price to the named destination port. It may help with initial landed-cost comparison, but the buyer still needs to understand the insurance level, exclusions, claims procedure and destination charges.
A CIF request should state:
- exact destination port;
- cargo description and quantity;
- required insurance cover;
- preferred shipment window;
- documentation requirements;
- whether the price must identify freight and insurance components;
- destination costs that remain for the buyer.
PT DAN’s current Order & Shipping page publishes FCA as preferred and FOB as available when applicable. CIF should therefore be treated as a requested term requiring feasibility review and written agreement, not as a standard published commitment.
Do not overlook FCA for containers
FCA can be used for any mode of transport and may be appropriate when containerized goods are handed to the buyer’s nominated carrier at an inland or terminal location before vessel loading.
PT DAN’s published process identifies FCA as the preferred option and requires the named handover place in Indonesia to be confirmed. Buyers comparing quotations should ask whether FCA better matches the actual point at which the carrier takes control.
Connect the shipping term to the product order
The delivery term should match the final product and packaging plan. PT DAN’s catalogue references include 18 metric tonnes for a 20 ft container and 25 metric tonnes for a 40 ft container, but final loads depend on the agreed product, packaging and loading arrangement.
Before signing, reconcile:
- product grade, shape and dimensions;
- inner and master packaging;
- net and gross shipment weight;
- container type;
- named place or port;
- included and excluded charges;
- cargo insurance scope;
- document set;
- inspection point;
- payment and claim procedures.
Standard documents and additional requirements
PT DAN’s published process identifies the commercial invoice, packing list and appropriate transport document as standard planning items. Origin, test, inspection or safety documents depend on the product, carrier, destination and written agreement.
The buyer should identify destination-country requirements early. Incoterms® rules allocate certain tasks and costs, but they do not replace customs, product, labeling or contractual compliance checks.
A practical quotation request
Provide the following information when asking PT DAN to compare terms:
- product and grade;
- shape and dimensions;
- packaging configuration;
- estimated quantity;
- destination country and port;
- requested rule and named place or port;
- insurance requirement, if applicable;
- target shipment timing;
- required documents.
PT DAN can then coordinate the feasible shipping scope with the relevant production and logistics partners and issue a written quotation.
Related buyer resources
- Review PT DAN’s order and shipping process
- Compare product specifications
- Review packaging and catalogue load references
- Follow the import workflow
- Understand a COA or laboratory report
Conclusion
FOB and CIF differ in who arranges main freight and insurance, but both transfer risk at shipment rather than destination. Containerized buyers should also consider whether FCA better reflects the actual handover point.
PT Dharma Artha Nusantara coordinates Indonesian sourcing, trading and export arrangements. The final Incoterms® rule, named place or port, included costs and documents are confirmed in the written quotation and order.