International coffee transactions require careful coordination between sellers and buyers, considering the different stages of the export process. In this context, the Incoterms play a fundamental role in establishing the responsibilities and obligations of each party involved. In this article we will explore the Incoterms related to the export of coffees from Brazil, highlighting how these rules facilitate and improve commercial transactions.
Incoterms: An Overview
Incoterms, short for “International Commercial Terms,” is a set of rules widely used to define responsibilities and costs in international transactions. In the context of coffee exports, understanding the Incoterms is essential to ensure an efficient and transparent negotiation.
EXW (Ex Works): The EXW Incoterm states that the goods are made available to the buyer at the specified location, such as a factory or warehouse. In this case, the buyer assumes responsibility for all costs and risks associated with the transportation of the goods to the destination abroad. The seller, in turn, must prepare the goods and provide all the necessary documentation for transportation.
FOB (Free On Board): The FOB Incoterm determines that the seller is responsible for delivering the goods on board a ship at the designated port of shipment, such as Santos or Rio de Janeiro. Thus, the goods are considered delivered as soon as they are on board, while the buyer bears the expenses and risks from that moment on, including unloading at the port of destination.
CFR (Cost and Freight): With the CFR Incoterm, the seller is responsible for reserving space on the ship and paying for the freight of the goods to the stipulated port of destination. In this modality, the cost is transferred to the buyer when the goods cross the ship’s rail at the port of shipment. Export procedures and fees are the responsibility of the seller, while import procedures are the responsibility of the buyer.
CIF (Cost, Insurance and Freight): In the CIF Incoterm, the seller must deliver the goods to the indicated port of destination, covering not only the transportation costs, but also insurance. The seller is responsible for export procedures and fees, while the buyer assumes the import obligations.
DAP (Delivered at Place): The DAP Incoterm states that the seller is responsible for delivering the goods to the indicated place of destination, usually the buyer’s business establishment. The seller bears the risks and costs related to the transport to the destination, ensuring readiness for unloading.
The Importance of Incoterms in Transactions
Incoterms play a crucial role in international coffee transactions, facilitating communication and defining responsibilities between sellers and buyers. By understanding and correctly applying the rules of the Incoterms, it is possible to establish more solid commercial agreements and promote a more efficient and reliable coffee export. At Atlantica, our experience with the Incoterms allows us to offer adequate solutions and ensure the success of coffee exports.
We use five Incoterms: EXW, FOB, CFR, CIF and DAP. This variety allows us to meet the specific needs of each negotiation, adapting the rules according to particular agreements and circumstances. Thus, we seek to ensure successful transactions, guided by clarity, efficiency, and transparency.
Read more:
South Minas: coffee that tells a story
Get to know the coffee characteristics of the Brazilian region South Minas, the world’s main coffee-producing region. Click here to read.
Western Bahia: The New Highlight in the Coffee Industry
Bahia, a state that plays an important role in Brazil due to its history and cultural influences expressed through music, cultural expressions, and cuisine, is also gaining space in the coffee industry… Read more.