Incoterms for Cambodian Traders: Who Pays for What

The trade term is a cost decision

Two suppliers can quote the same unit price and deliver wildly different landed costs, because the trade term decides where the seller's responsibility stops. Before comparing quotes, compare the terms.

The terms used most often here

EXW — Ex Works. The buyer collects from the seller's premises and handles everything else. It looks cheapest on the invoice and is usually the most expensive in practice, because the buyer has no control over origin handling.

FOB — Free On Board. The seller delivers the goods on board the vessel at the named port and clears export. The buyer arranges and pays for the main carriage and insurance. This is the most common basis for container imports into Cambodia.

CFR — Cost and Freight. The seller pays the main carriage to the destination port, but risk passes when the goods are on board. The buyer should insure from origin.

CIF — Cost, Insurance and Freight. As CFR, with the seller also providing insurance. Because the customs value in Cambodia is normally built on a CIF basis, CIF quotes are the easiest to turn into a landed cost.

DAP and DDP. The seller delivers to the destination, and under DDP also clears import duty. Attractive for a buyer who wants one number, but the seller may not be able to act as importer of record in Cambodia — check who is legally able to clear the goods before agreeing.

What each term covers, in one line

• EXW: seller does almost nothing beyond making the goods available.
• FOB: seller handles export clearance and loading.
• CFR: seller also pays ocean freight.
• CIF: seller also pays insurance.
• DAP: seller delivers to your door, duty unpaid.
• DDP: seller delivers with duty paid.

Three mistakes that cost money

1. Comparing an EXW price with a CIF price. Add freight, insurance and origin charges to the EXW number before you compare.
2. Assuming CIF insurance covers everything. Minimum cover under CIF is limited; if the cargo is valuable, buy your own cover and check the exclusions.
3. Forgetting that risk and cost can pass at different points. Under CFR and CIF, cost passes at destination but risk passes at loading. If the container is lost at sea, the buyer's insurance responds, not the seller's.

What to put in the contract

Name the term, the version of the Incoterms rules, and the exact named place — "CIF Sihanoukville, Incoterms 2020" rather than "CIF". Ambiguity in that line becomes an argument about money later.