Buyer's Guide: FOB, CFR, CIF and DAP for Ore and Concentrate Shipments
KWE Metals Trade Desk · · 7 min read
Who pays freight, who carries the risk and when title passes. A plain-English guide to choosing the right Incoterm when you buy bulk or bagged ore from Central America.
Two offers for the same ore can look very different simply because they use different Incoterms. Before comparing prices, make sure you know which costs and risks are included. Incoterms 2020, published by the International Chamber of Commerce, are the standard rules used in most mineral contracts.
FOB: Free On Board (port of loading)
The seller delivers the material loaded on the vessel at the named port, for example Puerto Cortés, Honduras. From that moment the buyer pays the ocean freight and insurance and carries the risk. FOB suits buyers who have their own freight contracts or a forwarder they trust.
CFR: Cost and Freight
The seller also pays ocean freight to the named destination port, but risk still passes to the buyer once the cargo is on board at origin. Buyers should arrange their own marine cargo insurance under CFR.
CIF: Cost, Insurance and Freight
As CFR, plus the seller buys minimum insurance cover for the voyage. Many buyers ask for higher cover than the minimum (Institute Cargo Clauses A instead of C); put this in the contract if you need it.
DAP: Delivered At Place
The seller carries cost and risk all the way to a named place in the buyer's country, ready for unloading. Import duties and customs clearance remain with the buyer. DAP is the simplest for buyers but usually carries the highest price, because the seller is taking more risk.
Checklist before you sign
- Name the exact port or place after the Incoterm, for example "CIF Rotterdam".
- Agree where weighing, sampling and assay take place (loading port, discharge port or both) and who appoints the independent inspector.
- Agree moisture limits and how wet tonnes convert to dry tonnes for invoicing.
- Agree payment terms: deposit, letter of credit or documentary collection, and which documents trigger payment.
- Check demurrage and port storage responsibilities.
You can compare indicative FOB, CFR, CIF and DAP figures with our freight and Incoterm calculators, then request a written quote from the trade desk. Calculator figures are estimates; only a written, signed offer is binding.