Incoterms, short for International Commercial Terms, are a set of standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers during international transactions, specifically regarding shipping, insurance, customs clearance, and risk transfer.
At Pornkamon Flour Mill Co., Ltd, understanding and applying the correct Incoterms is essential to ensure smooth export and import operations. As a global supplier of agricultural products and processed food, we use Incoterms to clearly outline the duties, costs, and risks between our company and our international partners.
Clarify Responsibilities: They specify which party (buyer or seller) is responsible for transportation, insurance, and customs duties.
Avoid Misunderstanding: Prevents confusion caused by different international trade laws.
Define Risk Transfer: Clearly indicates when the risk of loss or damage passes from seller to buyer.
Standardize Trade Practices: Creates uniformity and global understanding of shipping terms.
Facilitate Smooth Transactions: Helps logistics teams, freight forwarders, and customs authorities process shipments efficiently.
Incoterms are divided into two main categories based on mode of transport:
For All Modes of Transport: (Air, Sea, Road, Rail)
EXW, FCA, CPT, CIP, DAP, DPU, DDP
For Sea and Inland Waterway Transport Only:
FAS, FOB, CFR, CIF
Below are the 11 most commonly used Incoterms, with a focus on how they apply to export operations for agricultural and food products.
Meaning:
The seller makes the goods available at their premises (factory, warehouse, etc.). The buyer takes full responsibility for all costs and risks involved in transporting the goods from the seller’s location to the destination.
Seller’s Responsibility: Minimal – only to package and make goods available.
Buyer’s Responsibility: Transport, export/import duties, and insurance.
Example (for Pornkamon Flour Mill Co., Ltd):
Goods are picked up at our milling facility in Rayong Province by the buyer’s chosen freight forwarder.
Meaning:
The seller delivers the goods to a carrier or another person nominated by the buyer at the seller’s premises or another agreed place. Risk transfers once the goods are handed over.
Seller’s Responsibility: Deliver to carrier, clear for export.
Buyer’s Responsibility: Main transport, insurance, import duties.
Use Case:
Ideal for containerized shipments of processed food and agricultural products.
Meaning:
The seller pays for transportation of goods up to the destination point, but risk transfers to the buyer once goods are handed to the first carrier.
Seller’s Responsibility: Freight charges.
Buyer’s Responsibility: Risk after delivery to carrier, insurance optional.
Example:
Pornkamon Flour Mill Co., Ltd pays for transport to Bangkok Port; buyer handles import at destination.
Meaning:
Similar to CPT, but the seller must also provide insurance for the goods during transit.
Seller’s Responsibility: Freight + minimum insurance.
Buyer’s Responsibility: Import duties, additional insurance if required.
Use Case:
Common for high-value goods such as processed flour or packaged food exports.
Meaning:
The seller delivers when the goods are placed at the buyer’s disposal at the destination, ready for unloading.
Seller’s Responsibility: All transport costs to destination (excluding import clearance).
Buyer’s Responsibility: Import customs duties and taxes.
Use Case:
Convenient for international food buyers who want door-to-door delivery without handling logistics.
Meaning:
The seller delivers and unloads goods at the agreed destination. Risk passes to buyer after unloading.
Seller’s Responsibility: Transport and unloading.
Buyer’s Responsibility: Import clearance and taxes.
Example:
Pornkamon Flour Mill Co., Ltd delivers and unloads packaged rice or flour at the buyer’s warehouse abroad.
Meaning:
The seller is responsible for all costs, risks, and duties until goods reach the buyer’s location, cleared for import.
Seller’s Responsibility: Full responsibility – freight, insurance, customs, and taxes.
Buyer’s Responsibility: None, except receiving the goods.
Use Case:
Preferred for clients who want a complete delivery solution from Thailand to their doorsteps.
Meaning:
The seller delivers goods alongside the ship at the named port. The buyer takes responsibility from that point onwards.
Seller’s Responsibility: Export clearance and delivery beside the vessel.
Buyer’s Responsibility: Loading, freight, insurance, and import clearance.
Use Case:
Ideal for bulk agricultural products like rice, maize, or cassava shipped by vessel.
Meaning:
The seller delivers when goods are loaded on board the vessel at the port of shipment. Risk transfers to the buyer once goods are on the ship.
Seller’s Responsibility: Export clearance and loading on ship.
Buyer’s Responsibility: Freight, insurance, and import formalities.
Example:
Pornkamon Flour Mill Co., Ltd delivers rice onto a vessel at Laem Chabang Port; the buyer arranges shipping to Africa or Europe.
Meaning:
The seller pays the costs and freight to bring the goods to the destination port, but the risk passes to the buyer once goods are loaded onto the ship.
Seller’s Responsibility: Freight cost, export clearance.
Buyer’s Responsibility: Risk during transit, insurance, import duties.
Use Case:
Often used for sea shipments of bulk grains.
Meaning:
The seller pays for cost, freight, and insurance to transport goods to the destination port. Risk passes when goods are loaded onto the ship.
Seller’s Responsibility: Freight + insurance + export documentation.
Buyer’s Responsibility: Import clearance and local transportation.
Example:
Pornkamon Flour Mill Co., Ltd exports wheat flour to a buyer in Malaysia under CIF Port Klang.
The selection of the correct Incoterm depends on several factors, including:
Mode of Transport: Whether goods are shipped by sea, air, or land.
Control Preference: How much control the buyer or seller wants over shipping arrangements.
Risk Management: Who should bear the risk of damage or loss during transport.
Cost Sharing: How transportation and insurance costs are divided.
Buyer Experience: Less experienced importers may prefer DDP or DAP for simplicity.
Transparency: Both parties understand their financial and logistical responsibilities.
Efficiency: Reduces delays and disputes related to unclear delivery terms.
Risk Management: Defines the exact point where liability shifts from seller to buyer.
Professionalism: Enhances credibility and trust in international business relationships.
Compliance: Aligns with international trade and customs documentation standards.
In our international trade operations, we frequently use the following terms based on client preference and destination:
FOB (Free on Board) for sea shipments from Thailand to overseas buyers.
CIF (Cost, Insurance and Freight) for full-service exports where we handle insurance and freight.
DAP (Delivered at Place) for door-to-door deliveries to importers.
EXW (Ex Works) for buyers who prefer to handle pickup and export themselves.
Understanding and applying the correct Incoterms is essential for successful international trade. At Pornkamon Flour Mill Co., Ltd, we use these globally recognized trade terms to ensure transparency, reduce risk, and guarantee smooth business transactions with our partners around the world.
Whether shipping flour, rice, grains, or processed food, our logistics and export team ensures that every shipment is handled according to the agreed Incoterm — with precision, care, and professionalism.
Pornkamon Flour Mill Co., Ltd is a leading supplier of high-quality agricultural products and processed food in Thailand.
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