Incoterms rules decide where an exporter's obligations end and the buyer's begin: who books and pays for transport, who clears the goods for export and import, and at what point the risk of loss or damage passes. For herbs and spices shipped from Egypt to Europe or elsewhere, the choice shapes the landed cost, who controls the freight, and what happens if a container is delayed or damaged. This guide compares the rules used in practice, under the current edition, Incoterms® 2020.
What Incoterms rules do, and what they do not
An Incoterms rule defines delivery: costs, risk, and responsibility for export and import formalities. It does not decide when ownership passes, how or when the buyer pays, or which law governs the contract. Those belong in the sales contract. A rule should always be written in full, with a named place and the edition, for example "FOB Alexandria, Incoterms® 2020". A rule without the edition, or without a precise place, is an invitation to argue later.
The two families of rules
Incoterms® 2020 has eleven rules. Seven can be used for any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Four are for sea and inland waterway transport only: FAS, FOB, CFR and CIF.
That distinction matters for containers. Under FOB, CFR and CIF the seller delivers once the goods are on board the vessel. A container, however, is normally handed to the carrier at the terminal days before loading, and the seller cannot control what happens to it there. For that reason the International Chamber of Commerce recommends FCA, CPT or CIP for containerised cargo. In the herb trade FOB remains common by custom; if you use it, be clear about where the risk sits between the terminal gate and the ship's rail.
The rules used in the herb and spice trade
| Rule | Seller delivers when… | Main freight | Insurance | Best suited to |
|---|---|---|---|---|
| EXW | goods are made available at the seller's premises | Buyer | Buyer's choice | Rarely suitable for exports from Egypt: the buyer becomes responsible for Egyptian export formalities |
| FCA | goods are handed to the buyer's carrier at the named place | Buyer | Buyer's choice | Container shipments where the buyer controls the freight |
| FOB | goods are on board the vessel at the named port | Buyer | Buyer's choice | Buyers with their own freight rates; common practice from Alexandria |
| CFR | goods are on board; seller has paid freight to destination | Seller | Buyer's choice | Buyers who want a delivered-to-port price but arrange their own insurance |
| CIF | as CFR, plus seller insures the cargo | Seller | Seller, minimum cover | First shipments and smaller buyers |
| CIP | goods are handed to the first carrier; seller pays carriage and insurance | Seller | Seller, wider cover | Containerised equivalent of CIF |
| DAP | goods arrive at the named destination, ready for unloading | Seller | Seller's choice | Buyers who want delivery to their door but clear imports themselves |
Four points that decide the choice
1. Who controls the freight
Under FCA and FOB the buyer chooses the carrier and pays the freight. That suits importers with forwarder contracts and good rates, and it means the buyer, not the exporter, carries the risk of freight price swings. Under CFR, CIF, CIP and DAP the exporter books the freight and builds it into the price. That is simpler, but the buyer is accepting the exporter's rate and routing.
2. Where the risk passes
Under the C rules the seller pays the freight but the risk still passes at origin, when the goods are loaded or handed to the carrier. A buyer on CIF terms who suffers transit damage claims against the insurance, not against the seller. Under DAP the risk stays with the seller until the goods arrive.
3. Insurance
Only CIF and CIP oblige the seller to insure, and the 2020 edition treats them differently. CIF still requires only minimum cover, Institute Cargo Clauses (C). CIP now requires the broader cover of Institute Cargo Clauses (A). For dried herbs, where water damage and contamination are the realistic risks, minimum cover may not respond to the loss you are most likely to suffer. Agree the level of cover in writing, or insure the cargo yourself.
4. Customs formalities
Under every rule except EXW the seller clears the goods for export, and under every rule except DDP the buyer clears them for import. DDP makes the exporter responsible for EU import clearance, duties and import VAT, which in practice means acting as the importer. It is rarely workable for an Egyptian exporter selling into the EU.
Documents and payment
Incoterms rules interact with payment terms. Under a letter of credit the bank will usually want a bill of lading showing the goods loaded on board. Under FCA, where the seller's delivery happens before loading, the 2020 edition lets the parties agree that the buyer will instruct its carrier to issue an on-board bill of lading to the seller. If you pay by letter of credit on FCA terms, include that option in the contract. The export documents page lists what HS Herbs issues with each shipment.
A practical recommendation
- First shipment, or a buyer without its own forwarder: CIF or CIP to your port, with the insurance cover stated.
- Established importer with its own freight contracts: FOB Alexandria, or FCA at the container terminal, with a named forwarder.
- A mixed container of several products: any of the above, with one set of documents listing each product and lot. Consolidation is often cheaper per kilogram than separate small shipments.
Whatever you choose, write the rule, the named place and the edition in the contract, and make sure the invoice, the bill of lading and the insurance certificate all tell the same story.
Our terms
HS Herbs quotes FOB Alexandria as standard. CFR and CIF are also offered, and other Incoterms® 2020 rules, including FCA and DAP, are available on request. Our terms of trade set out delivery, documentation and payment, and the EU import guide covers what happens after the goods arrive. For a quotation on your terms, contact our export team.
