Incoterms 2020 for Ship Supply: FOB, CIF, DAP & DDP Explained

Two suppliers quote the "same" item at different prices — but one is delivered to the ship's side, the other is ex-warehouse with customs left to you. Are you really comparing like for like? Incoterms 2020, published by the International Chamber of Commerce (ICC), exist to answer exactly that question: who pays for what, and where risk passes from seller to buyer.

What Incoterms Are (and Aren't)

Incoterms are a set of eleven standardised three-letter trade terms that define the responsibilities of buyer and seller for delivery, risk transfer, insurance and customs. They are not a full contract and they do not set price or payment terms — but they remove the single biggest source of disputes in cross-border supply: "I thought that was included."

The Terms That Matter in Ship Supply

EXW (Ex Works)

The seller simply makes goods available at their premises. The buyer arranges everything else — transport, export, import, delivery to the vessel. Cheapest headline price, most work and risk for you.

FOB (Free On Board)

A classic maritime term. The seller delivers goods on board the vessel (or, in practice for stores, alongside) and clears them for export; risk passes once they are on board. Common for larger consignments loaded as cargo.

CIF (Cost, Insurance and Freight)

The seller pays cost, freight and a minimum insurance to the destination port. Useful when you want the supplier to handle the sea leg, but note the insurance cover required is minimal — top it up if the goods are valuable.

DAP (Delivered At Place)

The seller delivers to a named place — for ship supply this is often the quay or agent's warehouse — with the buyer handling import clearance. Increasingly the practical default for chandlery deliveries.