The first time a buyer asks you to quote FOB or DAP, it is easy to nod and look it up afterwards. That is a fair reaction. Incoterms are eleven three letter codes that decide who pays for what and who carries the risk at every stage of a shipment, and nobody is born knowing them. This guide covers the ones you will actually meet as a first time exporter from Indonesia, and the one mistake that costs the most money.
What an Incoterm actually decides
An Incoterm is not a payment term and it is not a shipping method. It answers three questions and nothing else.
- Cost. At which point does the buyer start paying instead of you.
- Risk. At which point does the cargo stop being your problem if it is damaged or lost.
- Paperwork. Who arranges export clearance, import clearance, and insurance.
Notice that cost and risk do not always change hands at the same place. That surprises most people the first time it matters.
The four you will actually meet
Incoterms 2020 lists eleven terms. In practice, a first time exporter from Indonesia deals with four of them.
- EXW, ex works. The buyer collects from your workshop or warehouse. You do almost nothing and you carry almost no risk, but you also have no control and no visibility. Buyers who are new to Indonesia usually dislike it.
- FOB, free on board. You deliver the cargo onto the vessel at an Indonesian port and handle export clearance. From the moment it is loaded, the freight and the risk are the buyer’s. This is the most common term for goods leaving Indonesia.
- CIF, cost insurance and freight. You also pay the sea freight and the insurance all the way to the buyer’s port. The buyer still handles import clearance and duty.
- DAP, delivered at place. You deliver to an address in the buyer’s country. Everything except import duty and taxes is yours. This gives the buyer the simplest experience and gives you the most exposure.
The trap inside CIF
Under CIF, you pay for the freight and the insurance, but the risk still passes to the buyer the moment the cargo is loaded onto the vessel in Indonesia. If the container is damaged mid ocean, it is the buyer who claims on the insurance you bought, not you.
This is the clearest example of cost and risk parting ways, and it is why reading CIF as door to door is wrong. If you want to know which of FOB and CIF fits your buyer better, we wrote a separate piece comparing the two in detail.
Which one to quote when you are starting out
Quote FOB. Your responsibility ends at a point you can physically see, at a port in your own country, under rules you already understand. You are not guessing at foreign trucking rates or a customs regime you have never dealt with.
Move to CIF once you want to hand your buyer one clean landed price and you trust your freight quotes. Consider DAP only when the relationship is worth the extra exposure and you have a forwarder who can actually deliver at the other end.
The mistake that costs the most
Sending a price without naming the term. If your buyer reads it as CIF and you meant FOB, the gap between the two numbers is the entire ocean freight bill, and that argument always arrives after the cargo has already sailed.
Write the term and the named place together, every time. Not FOB, but FOB Surabaya. Not DAP, but DAP Rotterdam. The place is part of the term, and an Incoterm without a place is not finished.
A quick reference
- EXW your warehouse. Buyer arranges everything from your door.
- FOB Indonesian port. You deliver to the ship and clear for export. Risk passes on loading.
- CIF buyer’s port. You also pay freight and insurance. Risk still passes on loading.
- DAP buyer’s address. You deliver to the door. Buyer pays import duty and taxes.
What this means for your first shipment
Pick the term before you quote, name the place, and put both on the invoice and the packing list so every document agrees. A mismatch between your invoice and your transport document is one of the most common reasons a shipment sits at a port waiting for a correction.
If you are unsure which term fits a particular buyer, ask before you send the quote rather than after. Getting it right at the quotation stage costs nothing. Getting it wrong after the vessel sails costs the freight.
Where we come in
Jalak Kargo Logistik handles export shipments from Bali, Jakarta, Semarang and Yogyakarta under any of these terms. We prepare the documents, arrange the freight, and make sure the term on your invoice matches what actually happens to your cargo. If you are quoting your first export order, send us the details and we will tell you which term makes sense and what it costs, before you commit to anything.
More questions about shipping from Bali? We keep the short answers on our FAQ page, including what it costs, how long it takes, and which documents you need.
