If you import goods, the Incoterm on your invoice quietly decides who arranges and pays for every step between the supplier and your warehouse. Get it wrong and you can pay twice, or not at all, for freight, insurance or clearance. Here is what each common term means for cargo coming into Berbera.
What is an Incoterm?
Incoterms (International Commercial Terms) are standard three-letter rules published by the International Chamber of Commerce. They define the exact point where responsibility, cost and risk pass from the seller to the buyer. They do not set the price of the goods; they set who does what to move them.
The terms importers meet most
EXW: Ex Works
The supplier simply makes the goods available at their factory or warehouse. Everything after that, export clearance, loading, freight, insurance, import duty and delivery, is the buyer's responsibility. It gives you the most control and often the lowest goods price, but you, or your forwarder, arrange the entire journey.
FOB: Free On Board
The supplier delivers the goods, cleared for export, onto the vessel at the origin port. From that point the freight, insurance, import clearance and delivery are yours. FOB is the most common term for sea imports because the handover point is clean and easy to price.
CFR and CIF: Cost and Freight / Cost, Insurance and Freight
Here the supplier pays the sea freight to Berbera (CFR), and with CIF also arranges marine insurance. You take over at the destination port for customs duty, clearance and delivery. Convenient, but the supplier builds the freight into the price, so always compare it against an FOB price plus your own freight quote.
DAP and DDP: Delivered At Place / Delivered Duty Paid
The supplier delivers all the way to a named place. With DAP you still pay the import duty and taxes; with DDP the supplier covers those too. These shift the most work to the seller, but you have the least control over routing and cost, and few suppliers quote DDP into Somaliland.
A quick comparison
- EXW you arrange everything from the supplier's door.
- FOB you take over once the goods are loaded at the origin port.
- CFR / CIF you take over when the goods reach Berbera.
- DAP the supplier delivers, you pay the duty.
- DDP the supplier delivers, duty paid.
Which should you choose?
For most importers bringing containers into Berbera, FOB or CIF strike the best balance. FOB gives you control of the freight, often cheaper if your forwarder has good rates; CIF is simpler if you would rather the supplier handle the sea leg. EXW makes sense when you want full control or are consolidating from several suppliers. Whatever you choose, the key is to know exactly where your responsibility starts, so nothing is missed and nothing is paid twice.
Where MCN Gateway fits
We work with whichever term suits your deal. Buying FOB or EXW? We arrange the freight, insurance, clearance and delivery. Buying CIF? We take over the moment your cargo reaches Berbera and clear it through to your door. Either way, you deal with one team and one quote. Ask us for a quote and tell us your Incoterm, we will handle the rest.