Two quotations for the same container of charcoal or coffee can look very different simply because they use different Incoterms. An EXW price looks cheapest, but you still have to pay for trucking, export clearance, ocean freight and insurance. A CIF price looks expensive, but most of those costs are already inside it. This guide explains the four Incoterms used most often for shipments from Indonesia, who pays for what, where the risk passes to you, and how to choose.
What Incoterms do, and what they do not
Incoterms are standard trade terms published by the International Chamber of Commerce. The current edition is Incoterms 2020. Each term defines three things: which costs the seller pays, which tasks the seller performs (such as export clearance), and the point at which the risk of loss or damage passes from seller to buyer. They do not decide when ownership transfers or how you pay; that belongs in your sales contract and payment terms.
The four terms at a glance
| Term | Seller delivers | Export clearance | Ocean freight | Risk passes to buyer |
|---|---|---|---|---|
| EXW – Ex Works | At the seller’s premises | Buyer | Buyer | When goods are made available |
| FOB – Free On Board | On board the vessel at the port of loading | Seller | Buyer | On board, port of loading |
| CFR – Cost and Freight | On board the vessel at the port of loading | Seller | Seller | On board, port of loading |
| CIF – Cost, Insurance and Freight | On board the vessel at the port of loading | Seller | Seller, plus insurance | On board, port of loading |
EXW: lowest price, most work for the buyer
Under EXW the seller only makes the goods available at its facility. Strictly, the buyer is responsible for loading, export clearance and everything after. In practice a foreign buyer cannot easily clear goods for export from Indonesia, so EXW works best when you have your own freight forwarder in Indonesia. Our EXW price already includes the printed boxes, inner plastic, strapping and loading onto your truck or container, which removes the usual grey areas.
FOB: the most common choice for experienced importers
With FOB the seller trucks the container to the port, clears it for export and loads it on board. Risk passes once the goods are on board at the port of loading, for example Tanjung Perak in Surabaya or Tanjung Priok in Jakarta. You book and pay the ocean freight, which suits buyers who already have contract rates with a shipping line or forwarder.
CFR and CIF: one price to your port
With CFR the seller also books and pays the ocean freight to your destination port. CIF adds cargo insurance arranged by the seller. Note that under Incoterms 2020, CIF only requires minimum cover (Institute Cargo Clauses C), so if you want broader cover, ask for it in the contract or insure the cargo yourself. In both terms the risk still passes to you when the goods are loaded in Indonesia, even though the seller pays the freight.
Which one should you choose?
- First order, no forwarder: ask for CFR or CIF so you can compare a landed-at-port price.
- You have freight contracts: FOB usually gives the best total cost and the most control.
- You have a forwarder in Indonesia: EXW can work well and keeps the product price transparent.
- Always: name the exact place or port after the term, for example “FOB Tanjung Perak, Incoterms 2020”.
How payment fits in
Incoterms do not set payment terms. We use a staged T/T for all Incoterms: 50% advance when the order is confirmed, 20% when packing starts and 30% when the container is closed. Our standard quotations are EXW Indonesia, and we quote FOB, CFR or CIF on request; just tell us your destination port.
Want to compare EXW, FOB and CIF for your market? Send us your destination port on WhatsApp and we will quote all three.
