FCA, FOB and CIF for mineral shipments

FCA, FOB and CIF allocate delivery responsibilities differently. Choosing among them requires a description of the actual route, the handover point and the parties arranging transport and insurance.

The International Chamber of Commerce publishes the Incoterms® rules. Use the agreed version and authoritative text when preparing the contract, with advice appropriate to the shipment. ^[1]

Begin with the delivery event

Describe the physical event the seller is expected to complete. Is material being collected at a facility, handed to a carrier at a terminal, or loaded aboard a vessel? Identify who controls that event and who can obtain evidence that it occurred.

Then identify the exact location. “FOB Nigeria” leaves a significant part of the intended arrangement unstated. Name the relevant port or place in the contract, including any necessary terminal or delivery-point detail.

Understand the practical distinction between FCA and FOB

ICC Academy explains that under FOB, delivery and transfer of risk occur when goods are on board the vessel at the named port of shipment. FCA can address delivery to a carrier at an agreed location. The actual handling of containerised cargo is therefore important when choosing between them. ^[2]

Do not select a rule merely because it appeared in a previous commodity contract. Discuss the route with the freight provider, insurer and advisers who will work on this shipment. Check that the required documents can be issued at the intended delivery point.

Separate who pays freight from who bears transport risk

A seller’s obligation to arrange or pay for transport should not be read as a general promise to bear every risk until destination. Read the chosen rule’s delivery and risk provisions together with its cost and insurance provisions. CIF in particular needs careful discussion of the agreed insurance arrangements and the shipment route. ^[1]

Ask the insurer to explain the cover, exclusions, insured interests and claims procedure for the proposed cargo. Document the losses covered, exclusions and conditions of the proposed policy.

Agree the matters outside the rule

The U.S. International Trade Administration notes that Incoterms do not determine every part of a sale, including the transfer of ownership or the method and timing of payment. Those matters need separate agreement. ^[3]

For minerals, also specify sampling, quality acceptance, quantity determination, settlement adjustments and the response to discrepancies. A transport term does not resolve disagreement about the grade of the material or which laboratory result will be used.

Walk through a delayed shipment

Before signing, discuss a realistic disruption: the truck arrives late, the vessel schedule changes or an inspection is incomplete. Identify who gives notice, who can stop the movement and who decides on additional costs under the agreement.

Use the exercise to find ambiguity, not to assume a standard answer. The rule, contract wording and facts of the event all matter. Record the operational contacts who will make and communicate decisions.

Shipment responsibility checklist

• Define the delivery point and the evidence of delivery.
• Allocate loading, inland transport, export procedures and main carriage.
• Record insurance responsibilities and claims contacts.
• State the inspection, payment and ownership provisions separately.
• Check that the full contract and logistics instructions tell the same story.

Have the matrix reviewed against the chosen rule and the full sale contract. Share the agreed version with the parties issuing shipping and payment instructions. For any item that remains disputed, record the point requiring advice before the shipment is authorised.