The figure on a quotation means nothing on its own. Two prices for the same product, the same tonnage and the same quality can differ by tens of percent purely because the delivery term is different. The Incoterms rules describe exactly where that difference comes from.
What a delivery term actually settles
Every Incoterm answers three questions: who bears the cost, who carries the risk, and where the goods physically change hands. Those three do not always meet at the same point, and a large share of trade disputes come from precisely that gap.
EXW — Ex Works
The goods are made available at the plant. Loading, inland haulage, customs and freight are the buyer's. This shows the lowest unit price, but most of the total landed cost has not entered that price yet. For a buyer with no operation in Türkiye it is rarely practical.
FOB — Free On Board
The seller is responsible until the goods are loaded onto the vessel at the port of shipment. Risk passes the moment the goods are on board. The buyer arranges freight and insurance. Buyers with their own carriage contracts and regular volume generally prefer FOB.
CFR — Cost and Freight
The seller also pays the freight and ships the goods to the destination port. Risk still passes at the port of loading, though. So even with the seller paying freight, damage in transit is the buyer's matter. This distinction is missed often.
CIF — Cost, Insurance and Freight
CFR plus a minimum level of cargo insurance. The seller takes out the policy but the buyer is the beneficiary. Standard CIF cover is usually basic; on high-value lots, widening the cover is worth discussing.
Which one to choose
- If you hold your own freight contract and ship regular volume, FOB is usually the most economical.
- If you want a single counterparty and a landed cost known upfront, CFR or CIF fits better.
- When comparing quotations, always convert them to the same delivery term first — otherwise the comparison misleads.
Whichever term you work on, the contract should also state which Incoterms revision applies. There are differences between the 2010 and 2020 rules, particularly around insurance cover and transport documents.
