FOB, FCA and CIF: Incoterms for African Commodity Trade
The three letter codes on an offer sheet decide who pays for what, where risk transfers and how disputes resolve. A practical guide for African cargoes.
Two offers for the same chrome concentrate can differ by twenty dollars a tonne and still be economically identical, because one is quoted at the mine gate and the other on board a vessel. The three-letter Incoterm on an offer sheet is not fine print; it is the price.
The three terms you will actually see
FCA (Free Carrier), the seller delivers goods, cleared for export, to a carrier at a named inland point: a mine siding in Steelpoort, a warehouse in Kitwe. From that moment, freight and risk are the buyer's. FCA suits buyers with their own logistics chains and is the honest basis for most landlocked origin offers, Zimbabwean chrome and Zambian copper are naturally FCA trades at origin.
FOB (Free On Board), the seller's obligations end when the cargo crosses the ship's rail at the named port. FOB Richards Bay, FOB Port Elizabeth: the seller has absorbed all inland logistics, port charges and export clearance. This is the standard basis for bulk coal and manganese, and it is why an FOB price is always meaningfully higher than the same material quoted FCA inland.
CIF (Cost, Insurance, Freight), the seller additionally arranges and pays ocean freight and marine insurance to the destination port. Note the subtlety: cost transfers at destination, but risk still transfers at loading. A CIF buyer owns the cargo's fate on the water, holding the insurance policy the seller purchased.
Where disputes actually come from
- Weight and assay basis. Is the payable quantity determined at loading or discharge? Draft survey or weighbridge? Specify the governing certificate.
- Demurrage. Bulk terminals charge for vessel delay by the hour. The contract must say who bears it and at what rate.
- Export clearance. Under FCA and FOB the seller clears exports, in permit-controlled trades like Zimbabwean chrome, verify the seller can actually do so before committing.
Which term should a producer offer?
Offer the term you can actually perform. A wash plant or mine with no rail allocation and no port arrangement should sell on an inland basis, free on truck at the plant or FCA at a named siding, and let the buyer or an intermediary carry the rest. That price will be lower than an FOB price for the same material, but it is honest, and it is the price you will actually be paid. A producer who quotes FOB without controlling the leg to the port is taking on cost and risk they cannot see.
Producers who do control their logistics, with rail slots, a port services agreement and a terminal arrangement, can capture the difference between an inland price and an FOB price, which is often the most valuable margin in the chain. Delivered terms such as DAP to a named inland point, common for chrome sold to South African smelters, sit in between: the seller carries the trucking, and the buyer carries nothing until the material arrives.
Whatever the term, state it with a named place on every offer, and agree where weight and assay are final. We explain how the full chain is papered in how a trade is structured, and if you want a view on the right basis for your material, tell us what you hold.
You have the material. We have the buyers.
Tell us the commodity, roughly what grade, how much you hold and where it sits. You will know inside a trading day whether we have a buyer for it.
