Incoterms define exactly where the seller's responsibility ends and the buyer's begins during a shipment — and they directly affect your landed cost calculation, so it's worth understanding the three most common terms in commodity trading.
FOB (Free on Board) means the seller's responsibility ends once goods are loaded onto the vessel at the origin port. The buyer arranges and pays for freight and insurance from that point onward, which gives more control over the shipping line and cost, but also more coordination.
CFR (Cost and Freight) includes the freight cost to the destination port in the seller's quote, but not insurance — the buyer still needs to arrange marine insurance separately to cover the goods in transit.
CIF (Cost, Insurance and Freight) bundles freight and insurance into the seller's quote, which is often the simplest option for a first-time importer since fewer parties need to be coordinated directly.
When comparing quotes, always confirm which incoterm is being used — a lower FOB price and a higher CIF price for the same goods aren't directly comparable until freight and insurance are added to the FOB figure.