Incoterms 2020 for vegetable oil buyers: FCA, CFR, CIF, DAP and DDP
FCA, CFR, CIF, DAP or DDP? How Incoterms 2020 split cost, risk and customs work on bulk and bottled vegetable oil shipments, and what to add to the contract.
Why the delivery term matters more with liquid cargo
An Incoterm is a three letter code from the rules published by the International Chamber of Commerce. The current edition is Incoterms 2020. Each code answers three questions: which costs the seller pays, at which point the risk of loss or damage moves to the buyer, and who handles export and import formalities. It does not say when ownership passes, what the price is or how payment works. Those belong in the sales contract.
With vegetable oil the choice has real consequences. Oil can be contaminated in a badly cleaned tank, a flexitank can leak, and weight differences between the loading and discharge figures are common. If the term puts the risk on you from the loading point, any claim for a loss in transit goes to the carrier or the insurer, not to the seller. Buyers who understand this choose terms that match their own logistics strength.
We quote FCA, CFR, CIF, DAP and DDP for our oils, so this guide covers those five. The same logic applies whether you buy bulk vegetable oil in tank trucks or bottled oil on pallets.
The five terms at a glance
A simplified view under Incoterms 2020. The exact place named after the code matters as much as the code itself.
| Term | Transport mode | Main carriage paid by | Risk passes to buyer | Import clearance and duties | Cargo insurance |
|---|---|---|---|---|---|
| FCA (Free Carrier) | Any mode | Buyer | When the goods are handed to the buyer's carrier at the named place | Buyer | Not required by the rule; buyer usually insures |
| CFR (Cost and Freight) | Sea and inland waterway | Seller | When the goods are on board the vessel at the port of shipment | Buyer | Not required; buyer usually insures |
| CIF (Cost, Insurance and Freight) | Sea and inland waterway | Seller | When the goods are on board the vessel at the port of shipment | Buyer | Seller buys minimum cover, Institute Cargo Clauses (C) |
| DAP (Delivered at Place) | Any mode | Seller | When the goods arrive at the named place, ready for unloading | Buyer | Not required; seller usually insures its own risk |
| DDP (Delivered Duty Paid) | Any mode | Seller | When the goods arrive at the named place, ready for unloading | Seller | Not required; seller usually insures its own risk |
Export clearance is the seller's job under all five terms. Under DAP and DDP unloading at destination is for the buyer unless the contract says otherwise.
FCA: you control the freight
Under FCA the seller clears the goods for export and hands them to the carrier you nominate at an agreed place. If that place is the seller's premises, delivery happens once the goods are loaded onto your truck. If it is somewhere else, such as a terminal, delivery happens when the seller's vehicle arrives there ready for unloading. From that moment the risk is yours.
FCA suits buyers who already have freight contracts, their own fleet or a forwarder with good rates on the route. For oil in tank trucks it gives you control over which carrier and which tank you get, which matters for food grade cargo. Ask for the cleaning certificate and the record of the previous three cargoes, a common requirement in edible oil transport.
Incoterms 2020 added an option under FCA that lets the parties agree that the buyer's carrier issues an on board bill of lading to the seller. This is useful when payment runs through a letter of credit that asks for that document.
CFR and CIF: the seller books the sea leg
With CFR and CIF the seller arranges and pays for carriage to the named destination port. The catch many new buyers miss is that the risk still passes at the port of shipment, once the goods are on board. If the cargo is damaged at sea, you claim against the carrier or the insurer, even though the seller chose the ship.
The only difference between the two is insurance. Under CIF the seller must buy cover for your benefit, and the rule only requires the minimum level, Institute Cargo Clauses (C), for 110% of the contract value. Clauses (C) cover major casualties but not, for example, every kind of leakage or contamination. If you want wider cover, ask for Clauses (A) in the contract or insure the cargo yourself.
Strictly speaking, the ICC designed CFR and CIF for goods loaded straight onto a vessel. For containerised cargo, such as oil in flexi bags in 20' containers or bottled oil in 40'HC containers, the ICC suggests CPT or CIP instead, because the container is handed over at a terminal well before loading. CFR and CIF are still widely used for containers in practice, so if you prefer them, make sure the risk point is clear in the contract.
DAP and DDP: delivered to your door
Under DAP the seller carries the cost and the risk all the way to the named place in your country, for example your warehouse or a bottling plant. The goods are delivered when they arrive on the seller's transport, ready for unloading. You unload, clear import customs and pay duties and import VAT.
DDP goes one step further: the seller also clears the goods for import and pays the duties and taxes. It is the easiest term for the buyer, but it only works if the seller can legally act as importer in your country, or uses an agent who can. Recovering import VAT can also be awkward for a foreign seller, so DDP is often priced with a margin for that.
Both terms are popular with retail chains and HoReCa distributors who want a landed price and one supplier to talk to. For heavy, regular volumes, a buyer with good logistics will often get a better total cost under FCA.
What to settle in the contract besides the Incoterm
The three letter code covers delivery. These points decide whether a shipment of oil goes smoothly.
Agree whether loading or discharge weight is final, how it is measured and what tolerance applies. A plus or minus range is normal for bulk liquids.
Name the specification, the sampling point and who analyses the samples. A loading certificate is common, with a retained sample for disputes.
Ask for food grade tanks, cleaning certificates and the previous cargo history. For flexi bags, agree who supplies and fits them.
List every document your customs and your bank need, such as the invoice, packing list, certificate of origin, quality certificate and transport document.
Incoterms do not deal with payment or ownership. State when title passes and how payment links to documents or delivery.
Set free time for loading and unloading and the rate for waiting beyond it. Truck and container detention adds up quickly.
How the choice looks for different shipments
Bulk oil by road usually moves in tank trucks of about 24 tonnes. Within Europe, FCA and DAP are the common choices: FCA if you run your own transport, DAP if you want the oil at your tank farm. We ship crude sunflower oil and refined sunflower oil this way, as well as rapeseed and soybean oil.
For longer routes and smaller lots, flexi bags in 20' containers are a flexible option. They travel as normal container cargo, so CFR, CIF and DAP all work, with the risk point set as described above. The cost of the flexitank and its fitting should be clear in the price.
Packaged goods, such as oil produced under private label bottling services or professional deep-frying oils in jerry cans and bag-in-box, travel in trucks with 32 or 33 pallets or in 40'HC containers loaded by boxes. Here DAP and DDP are popular with retail buyers, while importers with a forwarder often stay with FCA.
A simple way to choose
Start with one question: who can move this cargo more cheaply and more safely, you or the seller? If you have strong freight rates and an experienced forwarder, FCA gives you control and transparency. If you would rather compare landed prices, ask for DAP to your site. Use CFR or CIF when the seller has better access to shipping lines, and check the insurance level under CIF.
Keep DDP for cases where you really need a duty paid price, and confirm early that the seller can act as importer. Whatever term you pick, write the full place after it, such as "FCA loading point, Ukraine, Incoterms 2020" or "DAP buyer's warehouse, city, country, Incoterms 2020". A code without a precise place is the most common source of disputes.
It is worth asking for prices under two terms and comparing the total cost, because the cheapest price per ton is not always the cheapest delivery.
Get a quote under the term that suits you
Tell us the product, volume and destination, and we will price it under FCA, CFR, CIF, DAP or DDP so you can compare.
Written by the UKR AGROSUN OIL sales and production team.
