THE PROCESS IN MOTION

Where does the coffee change hands?

Start the scene or choose a stage. The animation simplifies the mechanism; what follows gives the details and the available references.

▶ Play the process01EXW: it all happens at the mill02FCA: handed over to the buyer's carrier03FOB: the coffee term04CFR and CIF: two lines that split apart05DAP: delivered to the warehouse

EXW: it all happens at the mill

The seller makes the coffee available to the buyer at the named place, here the mill, without loading it or clearing it through customs. From then on, the buyer bears the risk and pays for everything: loading, road, export customs, freight, import customs. The ICC itself advises against this term for exports, because the buyer must clear customs in a country that is not the buyer's own.

Read the stages without animation

1. EXW: it all happens at the millThe seller makes the coffee available to the buyer at the named place, here the mill, without loading it or clearing it through customs. From then on, the buyer bears the risk and pays for everything: loading, road, export customs, freight, import customs. The ICC itself advises against this term for exports, because the buyer must clear customs in a country that is not the buyer's own.
2. FCA: handed over to the buyer's carrierThe seller loads the coffee onto the truck of the carrier chosen by the buyer and clears it for export. The risk passes at loading; transport to the port and the freight are for the buyer. This is the usual sale for landlocked countries, with a combined bill of lading covering road and sea.
3. FOB: the coffee termRisk and costs change hands at the same place: once the coffee is on board the ship, at the named port of shipment. The seller pays for the road, export customs and loading; the buyer pays the freight. In coffee contracts, the FOB seller also books the space on board and prepares the documents, which the ICC rule does not require of the seller.
4. CFR and CIF: two lines that split apartThe risk always passes on board, at departure, as in FOB. But the seller pays the freight to the named port of arrival, and in CIF the insurance. The place written in the contract is therefore the place of arrival, while delivery takes place at departure: a bag lost at sea is lost for the buyer.
5. DAP: delivered to the warehouseThe seller bears the risk and pays for transport to the named place, the warehouse, where the coffee arrives on the truck, ready to be unloaded. Import customs, duties and unloading remain with the buyer. European importers thus sell coffee already landed, alongside ex-store, which is not an Incoterm.

To remember: An Incoterm fixes two points: where the risk passes and where the costs change hands. In FOB they coincide on board; in CFR and CIF they separate, the seller paying for a voyage made at the buyer's risk.

In history: The first rules of the International Chamber of Commerce, in 1936, already included FOB and CIF; the first European coffee contract dates from 1956.

Read the full article and its sources ↓

A green coffee contract often fits on one line: a quantity, a quality “as per sample,” a shipment period, a payment condition, and three letters followed by the name of a port. These three letters, FOB Santos or CIF Le Havre, are an Incoterm. They do not say what the coffee is worth, but how far the seller answers for it and who pays for each stage of the journey.

The International Chamber of Commerce, the ICC, which writes these rules, insists on this: “the FOB price” designates only a calculation formula, and the three letters are “neither exclusively, nor even mainly” indicators of price, but reciprocal obligations, the main one of which fixes the point where the risk passes from seller to buyer.

ICC, introduction, § 51 (source 1); ITC, p. 233 (source 9).

Eleven terms, four families

Born in Paris in 1919, the ICC compared six trade terms in thirteen countries as early as 1923: they changed meaning from one port to another. Its first rules, in 1936, defined six of them, FAS, FOB, C&F, CIF, Ex Ship and Ex Quay, among them FOB and CIF, which coffee still uses. The revisions followed transport: rail in 1953, air in 1974, the container in 1980, then the overhaul of 1990, which created FCA, the carrier designated by the buyer. The edition in force, Incoterms® 2020, was launched in September 2019.

Its eleven terms have been arranged since 2010 by mode of transport: seven for any mode, even if a ship covers part of the journey (EXW, FCA, CPT, CIP, DAP, DPU, DDP), four for sea and inland waterways (FAS, FOB, CFR, CIF). The older classification into four families, which the ICC keeps, follows the point of delivery:

• EEXW alone: the coffee waits for the buyer at the seller's premises, before any transport.
• FFCA, FAS, FOB: the seller hands the coffee to the carrier that the buyer has chosen and paid.
• CCPT, CIP, CFR, CIF: the seller pays for the main carriage, but delivers at departure.
• DDAP, DPU, DDP: the seller delivers at destination, and bears the risk up to that point.

F and C are sales “at departure,” says the ICC: the seller has fulfilled the obligation whether or not the coffee arrives. The 2020 edition changed four things that affect coffee: DAT, Delivered at Terminal, became DPU, Delivered at Place Unloaded, which differs from DAP only in that the seller unloads; the insurance differs between CIF and CIP; FCA makes it possible to hand the seller an “on board” bill of lading; the costs of a term fit in one article, A9 for the seller, B9 for the buyer.

ICC, “Incoterms® rules history” and “Incoterms® 2020” pages (source 3); ICC, introduction, § 4 and 21 to 25 (source 1).

Risk and costs: two lines, not one

An Incoterm is always followed by a named place, which the ICC holds to be decisive: where the coffee is delivered, or how far the seller arranges the transport, or both in the D family. Each term fixes there the transfer of risk, after which a stolen, wet or lost bag is no longer the seller's concern, and the sharing of costs, broadly the seller's before delivery, the buyer's after.

These two lines coincide, except in the C family, the source of most misunderstandings. In CFR, the seller pays the freight to the port of arrival, but the risk passed when the goods were put on board, at departure. ICC example: goods loaded at Shanghai for Southampton are delivered, and at the buyer's risk, from Shanghai, on a ship paid for by the seller as far as Southampton. “CFR Southampton” therefore names the place where the risk does not pass.

Export clearance, that is, the formalities that allow the goods to leave the country, falls to the seller except in EXW; import clearance, duties included, to the buyer except in DDP. The European contract says the same: duties and taxes of the country of origin to the seller, of the country of destination to the buyer.

ICC, introduction, § 7 and 16 to 20 (source 1); explanatory notes for CFR, points 1 and 4, and article A7 of the eleven rules (source 2); ESCC, shipment, art. 18 (source 4).

The route of a bag, stage by stage

The scene above follows a bag of green coffee through seven stages, from the farm to the importer's warehouse, each with its expense and its risk: at the dry mill, each lot receives its identification mark; at the port of shipment, the coffee is stuffed, that is, loaded into a container, then put on board. Almost all coffee now travels by container, bagged or in bulk; bags loaded loose in the hold survive only on a few coasts.

Terminal handling charges can shift an agreement. In FOB, unless otherwise agreed, the shipper pays them at departure and the consignee at arrival; in FCA, the consignee pays both, the guide of the International Trade Centre, the ITC, reminds us. A buyer who obtains a lower freight rate from a line with higher terminal charges at departure shifts an expense toward the exporter.

ITC, pp. 231, 244 and 246 (source 9); ICO, Rule 3 (source 7).

FOB, the coffee term

“Most coffee contracts are in fact FOB,” writes the ITC. The buyer pays the freight, and prefers to: a large importer obtains from the shipping lines what an isolated exporter could not, hence so many bills of lading that carry only “freight as agreed.”

According to the ICC, the FOB seller delivers on board the vessel designated by the buyer, at the named port of shipment; the risk and all costs then pass to the buyer. Earlier versions placed delivery at the “ship's rail,” the vessel's railing; the current rules have replaced this imaginary line with the sole fact of being on board.

Coffee's FOB is not the ICC's. From the first European contract, in 1956, the trade noted that a “free on board” sale should be treated as a poorly defined cost and freight contract, the freight remaining with the buyer. The current European contract makes it a rule: in FOB, CFR or CIF, the seller books the space on board, concludes the contract of carriage, arranges the shipment and prepares the documents; the seller's responsibility ends when the coffee passes the ship's rail, a term the contract keeps, as in CFR. On this point, writes the ITC, the standard coffee contracts prevail over the ICC.

Another tension: the ICC advises FCA rather than FOB when the goods are handed to the carrier before being on board, in a container terminal for example. That is the case of a container of coffee, which waits in the terminal stack between its handover and the crane. The European contract covers this interval through insurance: in FCA, FOB and CFR, the buyer insures the coffee before the shipment period, and the seller keeps the benefit of the policy as long as the documents have not been paid. The American contract of the Green Coffee Association has the risk pass at the ship's rail and leaves the terminal charges at loading to the seller.

ITC, pp. 230-231, 243 and 263-264 (source 9); ICC, explanatory notes for FOB, points 1, 2 and 4 (source 2); ESCC, introduction, arts. 12 and 17 (source 4); GCA, p. 8 (source 6).

CFR and CIF: the seller pays for the voyage, the buyer bears the risk

In CFR, Cost and Freight, the seller pays for transport to the named port of destination; for the European contract, this “freight” includes the rate and all surcharges, currency, fuel, port congestion, whether on the bill of lading or not, and an extra cost arising after shipment is for the buyer. The ICC advises the buyer to take out insurance, the voyage being at the buyer's risk.

CIF adds insurance to the freight. The ICC asks for the minimum there, clauses (C) of the Institute Cargo Clauses, the marine insurance clauses of the London market, on the contract value plus 10%, from the point of delivery to the port of destination, and reserves clauses (A), the widest, for CIP; it accepts the custom of a trade. The custom of coffee, in the European contract: “all risks” insurance on the model of clauses (A), plus war, strike and riot, on the contract value including freight plus 5%. The insurance certificate is transferred by endorsement, like the bill of lading.

ICC, explanatory notes for CFR, point 1, and CIF, art. A5 (source 2); ESCC, arts. 9, 17 and 20 (source 4); ITC, pp. 230, 239 and 264 (source 9).

FCA, when the country is landlocked

A landlocked country, Uganda for example, often sells FCA, Free Carrier: the seller hands the coffee, cleared for export, to the buyer's carrier, at the named place, loaded onto the truck if it is the seller's own premises, ready to be unloaded if the seller brings it elsewhere. The risk passes there, and all the freight, loading onto the ship included, is for the buyer. Carriers tied to shipping lines thus take the coffee at Kampala and deliver it at Hamburg under a combined bill of lading, valid by road and by sea.

To keep the seller's guarantees on weight and quality, the European contract has the coffee shipped no later than 56 days after its handover if it was delivered inland, 28 days if it was delivered at the port; the buyer bears the risks of the road, and the reference weight is the loaded weight, not the shipped weight.

ICC, explanatory notes for FCA, points 1, 5 and 6 (source 2); ITC, pp. 230 and 263 (source 9); ESCC, introduction and art. 13 (source 4).

EXW and DAP, at the two ends of the chain

EXW, Ex Works, asks the least of the seller: the seller makes the coffee available at the named place, a mill warehouse for example, without loading it or clearing it through customs. The risk passes when the coffee is made available, not at loading, hence a gray area if the seller loads anyway with its own equipment, which the ICC advises settling in advance. Above all, EXW leaves export customs to a buyer who is, by definition, foreign; the ICC advises against it and then recommends FCA. Neither of the two standard coffee contracts read here offers EXW.

DAP, Delivered at Place, is the other extreme: the seller pays for and organizes the transport to the named place, bears the risk of it, and delivers on the vehicle that has arrived, without unloading it. Import customs and duties stay with the buyer; if the buyer does not clear customs, the ICC specifies, the coffee stays blocked at the port, at the buyer's risk.

ICC, introduction, § 22 (source 1); explanatory notes for EXW and DAP, points 1, 5 and 6 (source 2); ESCC, introduction (source 4); GCA, pp. 8-10 (source 6).

Ex-warehouse, spot, ex dock: the usages of the trade

A lot of coffee changes hands in a warehouse in the consuming country. The ITC calls “spot” this coffee that has already arrived, available for example “ex warehouse Hamburg,” in a warehouse in Hamburg: a trade usage, which standard contracts define, not an Incoterm. For the European contract, a spot coffee is in a warehouse in Europe at the time of the sale and is sold “in/ex store,” that is, in a store, or FOB, FCA, DAT, DAP, DDP; in ex-store, the risk stays with the seller until the coffee, or its documents, are at the buyer's disposal, and the document of title is a warehouse receipt or a warrant from a recognized public warehouse, not a bill of lading. This physical market existed in New York from the founding of the exchange, in 1882, alongside the futures market.

The American contract has the risk pass, in ex dock, on the quay of the port of destination, freight and terminal charges paid, coffee cleared through customs; in ex warehouse, at the warehouse, the transfer up to that point being the seller's; in spot, where the coffee is sold, free of any charge. Most North American roasters buy ex dock and leave marine insurance to the importer, notes the ITC, whereas many Europeans buy FOB.

ITC, pp. 230, 236 and 264 (source 9); ESCC, introduction, spot contract and delivery, art. 18 (source 4); GCA, pp. 9-10 (source 6); plate “The economics of coffee,” section on the exchanges (source 10).

What the standard contracts add

Coffee contracts do not refer to Incoterms, without rejection or disagreement, the ITC specifies: faced with general rules, they want to remain autonomous and clear. Two texts share the market. In Europe, the one of the European Coffee Federation, the ECF: to the European Contract for Coffee, published in 1956 by the European associations of green coffee traders, were added a spot contract in 1983, a contract for bulk in 1995, attached to the first in 2002, a delivery contract and an FCA contract in 2012. The four were merged in 2018 into the European Standard Contract for Coffee, the ESCC, in force since September 1, 2018, amended in 2019 and in 2021: shipment, delivery and spot sales, only the English version being authoritative.

It fixes what Incoterms leave unsaid: the goods, payment, transfer of ownership, disputes. Tolerance of 3% more or less on the quantity, if the difference is beyond the seller's control; reimbursement by the seller beyond 0.5% loss on the invoiced weight, established by an independent weigher. The coffee must conform to the description, sound and merchantable: a difference established by arbitration gives the right to an allowance, and an unsound coffee, excessive moisture being one criterion, or a radically different one can be re-invoiced to the seller. Arbitration samples are drawn and sealed by an independent body within 28 days after unloading, the period for quality claims. A dispute not settled amicably goes to arbitration at the place provided, under the rules of the coffee arbitration chamber of that place, London, Hamburg and Le Havre foremost; anyone who fails to carry out an award may have their name reported to the whole trade. The 1980 Vienna Convention on Contracts for the International Sale of Goods is expressly set aside in favor of the law of the country of arbitration.

In the United States, the Green Coffee Association, founded in 1923, publishes general conditions in force since 2002, last amended in 2021. Nine contracts there allocate costs and risk: four for coffee sold outside the country of destination, four within that country, one for coffee delivered at the border. Quality is described by crop year, grade, screen size, that is, the size of the beans measured on a sieve, color, cup, roasting behavior and a maximum moisture; a claim must be made within 15 days following unloading or the obtaining of all authorizations. The “No pass, no sale” clause of every import contract cancels the sale for the share of coffee that the authorities refuse at entry.

ITC, pp. 240-242 and 264 (source 9); ESCC, introduction, shipment, arts. 1, 2, 7, 8 and 24, general provisions, arts. 2 and 3 (source 4); FoodDrinkEurope (source 5); GCA, pp. 8 and 13 (source 6); ICC, introduction, § 7 (source 1).

The documents that count

International sales, writes the ITC, are carried out by transfer of title, not by physical transfer: this title is the bill of lading (B/L), issued by the shipping line from the mate's receipt that the ship's mate signs at loading. It names the shipper, the consignee and the party to notify on arrival, carries its number, the vessel, the ports of loading and destination, the number of originals, the container and seal numbers, and above all the dated notation, without reservation as to the condition of the coffee, that it is on board: this date proves shipment. It is negotiated by endorsement, each holder transferring the title to the next, and a single break in the chain voids the subsequent transfers. Issued as a set of two or three originals, each of which allows the coffee to be claimed, it must be complete for the buyer to pay.

The European contract lists what the seller supplies at no charge: the invoice; the carrier's receipt, the complete set of “on board” bills of lading or a delivery order from the shipping line; the weight certificate; the insurance certificate in CIF. And, if the buyer asks for them in time, the ICO certificates of origin, certificates of preferential entry, which open a right to a reduced customs duty, certificates of fumigation, and the phytosanitary certificate, an attestation of the sanitary condition of plant goods issued by a state service in the form prescribed by the law of the country.

The ICO certificate of origin follows rules revised in October 2022. Every export has one, endorsed by customs or the approved agency just before export; the original accompanies the shipping documents. Each lot carries a unique mark, printed in a frame on all the bags or stamped on a metal plate attached to them, and carried over to the certificate: member country code, three digits at most, exporter code, four, lot number, five, starting again from 1 each October 1; the unique consignment reference recommended by the World Customs Organization may replace it. The ICO called its members to order in 2019 after the arrival of a cargo without a mark, neither on the bags nor on the container. These certificates count for less than in the days of quotas, observes the ITC, and some consuming countries no longer require them; they remain the basis of the world coffee trade statistics.

ITC, pp. 231 and 236-239 (source 9); ESCC, shipment, arts. 11 and 20 (source 4); ICO, introduction and Rule 3 (source 7); ICO, ED 2315/19 (source 8).

Reading a contract, or a label

“FOB Santos” and “CIF Le Havre” both deliver on board, at departure: the first names the port where the risk passes, the second the port where the freight paid by the seller stops, and confusing them is the most common mistake. On a roaster's provenance sheet, “FOB” means coffee on board at the port of origin, with everything that precedes it, farm, mill, road, export customs, without saying how this whole is divided among producer, cooperative, mill and exporter; “ex-warehouse” or “spot” at a European importer means coffee already landed, which changes hands at the warehouse door. What these points are worth in money belongs to the signed viewpoints, in particular to “What isn't said about the price of specialty coffee.”

ICC, introduction, § 16 and 24, and explanatory notes for CFR, point 4 (sources 1 and 2); ITC, p. 230 (source 9).

What the sources do not say

No source consulted gives the share of each term in the green coffee trade: that most contracts are FOB, that the use of FCA is growing and that CIF sales have become very rare, the ITC notes without statistics. None documents the often-mentioned use of EXW for microlots: the ITC describes the difficulties of small lots, groupage, air freight, empty space paid for in the container, without linking them to a term. Finally, the ITC gives 21 days after unloading for quality claims under the European contracts, the amended ESCC read here 28, the period retained above; the gap may come from an earlier version of the contract.

ITC, pp. 230, 250 and 264 (source 9); ESCC, shipment, art. 24 (source 4).

The sources for this section

1. International Chamber of Commerce (ICC), Incoterms® 2020, Paris, ICC, 2019, introduction, § 4 to 8, 16 to 25 and 51, read in the ICC digital library (library.iccwbo.org, work BK_0049, “Introduction”), accessed October 21, 2026.
2. ICC, Incoterms® 2020, explanatory notes and articles A2 to A7 of the EXW, FCA and DAP rules (“Rules for any mode or modes of transport”) and of the FOB, CFR and CIF rules (“Rules for sea and inland waterway transport”), same library, accessed October 21, 2026.
3. ICC, “Incoterms® 2020” and “Incoterms® rules history” pages, iccwbo.org, accessed October 21, 2026.
4. European Coffee Federation, European Standard Contract for Coffee (ESCC), amended 2018 edition, adopted June 19, 2018, in force September 1, 2018, published in June 2018, June 2019 and January 2021, ecf-coffee.org.
5. FoodDrinkEurope, “European Standard Contract for Coffee: facilitating the green coffee trade,” April 4, 2021, fooddrinkeurope.eu.
6. Green Coffee Association, Contract Terms and Conditions, in force May 1, 2002, amended through September 27, 2021, greencoffeeassociation.org; read from the page images, the text layer of the file being unreadable.
7. International Coffee Organization (ICO), Rules on Statistics. Certificates of Origin, document ICC-102-9 Rev. 5, approved by the International Coffee Council at its 134th session, October 7, 2022.
8. ICO, document ED 2315/19, “Rule 3 of the Rules of Statistics. Certificates of Origin: Marking of bags and other packaging for export,” September 2, 2019.
9. International Trade Centre, The Coffee Guide, 4th edition, Geneva, ITC, 2021, chapter 7, “The commercial aspects of the coffee trade,” pp. 230 to 264.
10. PXL Roasters, plate “The economics of coffee,” section on the exchanges (the New York “spot” market); viewpoint “What isn't said about the price of specialty coffee,” for the question of price.