Every green coffee price is meaningless without three letters after it. '$4.80/kg' tells you nothing; '$4.80/kg FOB Laem Chabang' tells you exactly where the seller's costs and risks end and yours begin. Incoterms — the ICC's standardized trade terms — are the grammar of the coffee trade, and buyers who read them fluently avoid the expensive surprises that hide between a warehouse in Laos and a roastery in Hamburg.
FOB: The Coffee Trade's Native Language
Free On Board (named port) — the seller delivers export-cleared goods loaded on the vessel; from that moment, cost and risk are the buyer's. In practice: we truck from Pakse, clear Lao and Thai formalities, and load at Laem Chabang; you book and pay ocean freight, insurance, and everything after. Most specialty coffee trades FOB because buyers (or their importers) hold freight contracts and want routing control.
Worked example: 19.2 t of washed Arabica at $4.80/kg FOB Laem Chabang = $92,160. Buyer adds ocean freight to Hamburg (~$2,500), insurance (~$350), and destination costs — landing around $95,500 before duty (which is zero on green coffee into the EU).
CFR and CIF: Seller Arranges the Ocean
Cost and Freight (CFR) adds ocean freight to the seller's side; Cost, Insurance and Freight (CIF) adds marine insurance too. Crucially, risk still transfers at loading — the seller pays for the voyage but doesn't carry its risks; the insurance (CIF) exists for the buyer's claim. These terms suit newer importers without freight relationships: one price to your port, one counterparty. The tradeoff is routing control and, usually, a small margin on the freight arrangement.
The same shipment CIF Hamburg might quote $5.00/kg — the FOB price plus freight and insurance rolled in. Compare quotes across sellers only after normalizing terms; a 'cheaper' CIF can hide an expensive FOB and vice versa.
The Terms to Handle with Care
EXW (Ex Works) puts export clearance on the buyer — genuinely impractical from Laos, where clearance needs local presence; treat EXW coffee quotes as a red flag or a misunderstanding. DAP/DDP (delivered terms) put nearly everything on the seller and price accordingly; useful for samples and LCL pallets, rarely optimal for containers. FCA (Free Carrier) is the technically-correct modern cousin of FOB for containerized freight and appears increasingly in contracts — commercially it behaves like FOB for coffee buyers.
Our standing practice: we quote FOB Laem Chabang as the reference and CFR/CIF to any port on request, with every cost line itemized so you can see exactly what the three letters are buying. Incoterms allocate risk; transparency is what makes the allocation fair.