Incoterms (International Commercial Terms) define the responsibilities of buyers and sellers in international trade. Understanding them is crucial for managing costs and risks.
The 11 Incoterms 2020 Rules
Incoterms 2020 includes 11 rules divided into two categories: rules for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP) and rules for sea and inland waterway transport (FAS, FOB, CFR, CIF).
Most Commonly Used Terms
FOB (Free On Board): The seller delivers goods onto the vessel. Risk transfers to the buyer once goods are on board. This is the most popular term for ocean freight.
CIF (Cost, Insurance and Freight): The seller pays for transport and insurance to the destination port. However, risk transfers at the port of shipment.
DDP (Delivered Duty Paid): The seller handles everything including duties and taxes. The buyer simply receives the goods at their premises.
Choosing the Right Incoterm
The right Incoterm depends on your experience level, bargaining position, and risk tolerance. WTL's trade advisors help clients select the optimal Incoterm for each transaction, ensuring clarity and minimizing disputes.
Common Mistakes
Using FOB for containerized cargo (FCA is more appropriate), confusing CIF with CIP, and failing to specify the named place correctly are frequent errors that can lead to costly disputes.
Which Incoterm Should You Use for Senegal and the Port of Dakar?
For imports into Senegal, the Incoterm you negotiate decides who books the ocean leg, who validates the mandatory BESC cargo tracking note, and how smoothly your container clears Dakar. Three practical rules from our clearing desk:
- FOB (or FCA) plus your own forwarder is usually the strongest position. You control the carrier, the transit time and the Dakar port charges -- and your forwarder validates the BESC before the vessel sails instead of chasing the seller's agent for it after arrival.
- CIF does not mean "cleared". Senegalese customs calculates duties and VAT on the CIF value whatever term you buy on. Under CIF the seller only covers freight and minimum insurance to Dakar -- customs clearance, port charges and delivery remain entirely yours.
- Be careful with DDP into Senegal. A foreign seller can rarely act as importer of record in Dakar or recover Senegalese VAT, so "delivered duty paid" often turns into delays and disputed invoices. DAP plus a local clearing agent is almost always the cleaner structure.
Whichever term you negotiate, the taxes themselves do not change -- see our Senegal import duties and taxes guide for the full Dakar cost stack, or ask our forwarding team which term fits your next shipment.