Every green coffee offer comes with three or four letters attached to the price: FOB, CFR or CIF. They look like small print, but they decide who pays for shipping, who pays for insurance, and, most importantly, who carries the risk if something goes wrong at sea. Understanding FOB vs CIF (and CFR in between) is one of the first things any coffee buyer needs to get right.
We quote all three terms for coffee shipped from Belawan port in North Sumatra. This guide explains what each term means, what’s included in the price, when the risk passes from seller to buyer, and how to choose the right term for your business.
FOB vs CIF at a glance
| FOB | Free On Board: seller covers costs until the coffee is loaded on the ship |
| CFR (or CNF) | Cost and Freight: seller also pays sea freight to your port |
| CIF | Cost, Insurance and Freight: seller also buys basic marine insurance |
| When risk passes | For all three, once the coffee is on board in the origin port |
| Rulebook | Incoterms 2020, published by the International Chamber of Commerce |
| Simple formula | CIF = FOB + sea freight + insurance |
What are Incoterms?
Incoterms are standard trade terms published by the International Chamber of Commerce (ICC). The current edition, Incoterms 2020, contains 11 rules. Each one sets out, in a few letters, which costs the seller pays, which the buyer pays, and at what point the risk of loss or damage moves from one to the other.
Green coffee is traded mostly on three of them: FOB, CFR and CIF. All three are designed for sea freight and are always written with a named port, for example “FOB Belawan” or “CIF Hamburg.” For a fuller definition, see Wikipedia’s article on FOB shipping, which also explains how Incoterms define the transfer of risk.
FOB: Free On Board
Under FOB, the seller’s job ends when the coffee is loaded on board the ship at the origin port. The seller pays for everything up to that point: preparing and bagging the coffee, trucking it to the port, export clearance and loading. From there, the buyer pays the sea freight, arranges insurance, and handles everything at the destination.
Best for: importers and larger roasters who have their own freight forwarder, negotiate their own shipping rates and want control over the logistics.
CFR: Cost and Freight
CFR, often written CNF or C&F in the coffee trade, means the seller also books and pays the sea freight to the destination port you name. The buyer still arranges insurance and handles import clearance.
Here’s the catch many first-time buyers miss: even though the seller pays the freight, the risk still passes to the buyer when the coffee is loaded at origin. If the container is damaged at sea, it’s the buyer’s insurance that needs to cover it.
Best for: buyers who’d like the seller to handle the booking but already have their own cargo insurance.
CIF: Cost, Insurance and Freight
CIF is CFR plus insurance. The seller pays the freight and also buys marine insurance for the voyage, naming the buyer as the one who can claim. Under Incoterms 2020, the seller only has to buy minimum cover, which protects against major events rather than every kind of damage. If you want broader protection, ask for it in the contract or top it up yourself.
As with CFR, the risk passes to the buyer once the coffee is loaded at origin. The insurance is there so you can claim if something goes wrong after that point.
Best for: first-time importers and smaller buyers who want one all-in price to their port.
FOB vs CFR vs CIF: who pays for what
| Cost | FOB | CFR | CIF |
|---|---|---|---|
| Coffee, bags and preparation | Seller | Seller | Seller |
| Transport to the origin port | Seller | Seller | Seller |
| Export clearance and documents | Seller | Seller | Seller |
| Loading on the ship | Seller | Seller | Seller |
| Sea freight | Buyer | Seller | Seller |
| Marine insurance | Buyer | Buyer | Seller (minimum cover) |
| Unloading and port charges at destination | Buyer | Buyer* | Buyer* |
| Import clearance and duties | Buyer | Buyer | Buyer |
| Transport to your warehouse | Buyer | Buyer | Buyer |
| Risk during the sea voyage | Buyer | Buyer | Buyer |
*Some destination charges can be included in the freight, depending on the shipping line. Check what your quote covers.
FOB vs CIF: how to compare prices
A CIF price always looks higher than an FOB price for the same coffee, because it includes freight and insurance. To compare offers fairly, convert them to the same basis.
The basic relationship is simple: CIF = FOB + sea freight + insurance, and CFR = FOB + sea freight. If one supplier quotes FOB and another quotes CIF, ask your forwarder for current freight rates on the route and add them to the FOB price before comparing.
Also check what each quote assumes about packing, such as plain jute bags or bags with hermetic liners, because that changes the price as well. Our guide to green coffee storage explains why liners are worth considering for long voyages.
Which term should you choose?
There’s no single right answer. Research on how companies choose Incoterms backs this up: a study in LogForum by Unal and Metin (2021) found that transport cost is the biggest factor for both exporters and importers. Beyond that, exporters care more about their relationship with forwarding agents and the distance involved, while importers care more about the type of goods and how complicated the transport is.
| Your situation | Consider | Why |
|---|---|---|
| First import, small volume | CIF | One price, freight and insurance handled |
| Have insurance, want the seller to book shipping | CFR | Less admin, your own cover |
| Have a forwarder with good rates | FOB | Most control and often lowest total cost |
| Consolidating coffee from several origins | FOB | Your forwarder coordinates everything |
| Buying regularly from one supplier | FOB or CFR | Compare freight costs and choose case by case |
Other Incoterms you might see
- EXW (Ex Works): the buyer collects the coffee from the seller’s warehouse and handles everything, including export. Rare in coffee exports from Indonesia.
- FCA (Free Carrier): similar to FOB, but the seller’s responsibility ends when the goods are handed to the carrier, for example at the container terminal. The ICC often recommends it for container shipments, though FOB remains the habit in the coffee trade.
- DAP and DDP: the seller delivers to your door, with DDP also covering import duties. These are uncommon for green coffee exports.
What else goes in the contract
The Incoterm is just one line of a green coffee contract. To avoid disputes, make sure the contract also states:
- the named port, such as FOB Belawan or CIF Rotterdam
- the coffee’s origin, grade, process, crop year and quantity
- the shipment period, such as “October to November shipment”
- packing (jute bags, liners) and container type
- the payment method and which documents trigger payment
- whether payment is based on shipped or landed weights
- approval of the pre-shipment sample and what happens if quality doesn’t match
- the level of insurance cover under CIF
Our step-by-step guide on how to import coffee from Indonesia covers payment, documents and customs, and our green beans coffee sampling guide explains how pre-shipment samples fit in.
Shipping terms for our coffee
We ship Sumatran green coffee from Belawan port in Medan, and we can quote on FOB, CFR or CIF terms, depending on what suits you. Our range includes Mandheling and Gayo Arabica, Lintong, and Sumatra Robusta, in grades explained in our guide to Indonesian coffee grades.
| Item | Details |
|---|---|
| Loading port | Belawan, Medan, North Sumatra |
| Price terms | FOB, CFR, CIF (negotiable) |
| Packing | 60 kg jute bags |
| Full container | About 320 bags, roughly 19.2 tonnes in a 20-foot container |
| Payment | L/C or bank transfer |
See all our origins and grades on the Coffee Offerings page.
Get a quote on your terms
Tell us your destination port and preferred Incoterm, and start with samples of the coffees you’re interested in.
Frequently asked questions
FOB vs CIF: what is the difference?
Under FOB, the seller pays costs until the coffee is loaded on the ship, and the buyer pays freight and insurance. Under CIF, the seller also pays sea freight and minimum insurance to the destination port. In both cases, the risk passes to the buyer once the coffee is loaded at origin.
Is CFR the same as CNF?
Yes. CNF and C&F are older abbreviations still common in the coffee trade. The official Incoterms 2020 term is CFR, Cost and Freight.
Who is responsible if coffee is damaged at sea under CIF?
The buyer carries the risk once the coffee is on board, but under CIF the seller has bought insurance that the buyer can claim against. Check the level of cover, because the minimum required is fairly limited.
Is FOB or CIF cheaper?
The FOB price is always lower because it excludes freight and insurance. Which works out cheaper overall depends on whether you can get better freight and insurance rates than the seller.
Which Incoterm is best for a first coffee import?
Many first-time buyers choose CIF because freight and insurance are arranged for them. Once you have a forwarder and insurance in place, FOB often gives more control and better rates.
What does “FOB Belawan” mean?
It means the price covers everything until the coffee is loaded on board a ship at Belawan port in Medan, North Sumatra. From there, the buyer pays the freight and insurance.
CV. Buah Berdikari is a coffee trading and exporting company based in North Sumatra, Indonesia. We source Arabica and Robusta green coffee from North Sumatra and Aceh and help roasters and importers find the lots that fit what they’re making.