Why Incoterms matter in fuel
A diesel cargo is the same diesel whether it arrives CIF or FOB — but the price, the risk of in-transit loss, and the demurrage exposure differ entirely. Picking the right Incoterm is a procurement decision worth real money.
CIF — Cost, Insurance, Freight
Seller pays product, freight, and marine insurance to the named destination port. Risk transfers when the cargo crosses the ship's rail at the loading port (note: even though the seller is paying for shipping). Buyer's only logistics responsibility is discharge.
Use when: you do not have shipping relationships and want a delivered price.
FOB — Free on Board
Seller delivers product onto the buyer's nominated vessel at the loading port. Risk and cost transfer at the loading port. Buyer arranges shipping, insurance, and discharge.
Use when: you have your own shipping or trader-routed freight and want full control of the logistics chain.
TTO / TTT — Tank-to-Tank Transfer
Title moves from seller's tank to buyer's tank at the same terminal. No vessel. No shipping. Lowest-risk delivery mode for spot cargoes — dip test happens at the moment of transfer.
Use when: you have or can lease tank capacity at a major hub (Rotterdam, Fujairah, Singapore, Houston).
Other Incoterms occasionally used
- DAP (Delivered at Place) — seller delivers to a named place inland
- DDP (Delivered Duty Paid) — seller handles duties; rare in fuel due to tax complexity
- EXW (Ex Works) — seller makes available at refinery gate; buyer handles everything else
Demurrage gotchas
Under CIF, the seller pays demurrage at the loading port; the buyer pays demurrage at the discharge port. Under FOB, the buyer pays at both. Under TTO, demurrage is mostly irrelevant. Always confirm laycan and tolerance in the SPA.
What we typically recommend
For first-time buyers without shipping infrastructure, CIF or TTO are safer choices. Once you have a routing relationship and shipping desk, FOB unlocks better pricing and more flexibility.
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