Incoterms for Steel Purchases: EXW, FOB, CFR, CIF and DAP Explained
Which Incoterm should you use when buying steel for Saudi Arabia? EXW, FCA, FOB, CFR, CIF, DAP and DDP explained with who pays freight, insurance, duties and risk.
Saudi Steel Work Editorial Team · · 3 min read
Short answer: Incoterms define where cost and risk pass from seller to buyer. For steel imports into Saudi Arabia, CFR or CIF to a Saudi port is common, with the buyer handling clearance and inland delivery; DAP or DDP shift more work to the seller. Always name the exact place, such as 'CFR Dammam'.
When steel is bought internationally, the price only means something with its Incoterm. "USD 600 per tonne" FOB in Asia and "USD 600 per tonne" DAP Riyadh are very different offers. Incoterms, published by the International Chamber of Commerce, standardise who pays what and when risk transfers.
The Incoterms most used for steel
| Incoterm | Seller pays up to | Risk passes to buyer | Typical use |
|---|---|---|---|
| EXW (Ex Works) | Goods ready at seller's premises | At seller's premises | Rare for exports; buyer handles everything |
| FCA (Free Carrier) | Handover to buyer's carrier | At handover | Containerised steel |
| FOB (Free On Board) | Loading on vessel at origin port | When loaded on board | Bulk and breakbulk steel |
| CFR (Cost and Freight) | Sea freight to destination port | When loaded on board at origin | Very common for steel into KSA |
| CIF (Cost, Insurance, Freight) | Freight + minimum insurance | When loaded on board at origin | Common; check insurance cover level |
| DAP (Delivered at Place) | Delivery to named place, not cleared | At named place | Supplier-managed delivery |
| DDP (Delivered Duty Paid) | Delivery cleared, duties paid | At named place | Least work for buyer |
FOB, CFR and CIF are intended for sea and inland waterway transport; for containers, FCA, CPT and CIP are often more appropriate.
Costs the buyer still carries
Under CFR or CIF to a Saudi port such as Dammam, Jeddah or Jubail, the buyer usually pays:
- Port and terminal charges at destination
- Customs clearance and any applicable duties
- SASO conformity and SABER-related costs where products are regulated (SASO guide)
- Inland transport to site
- Offloading
Build all of these into a landed cost before comparing with local supply — see local vs imported steel.
Risk vs cost: a common trap
Under CFR and CIF the seller pays freight, but risk transfers at the origin port. If cargo is damaged at sea, the buyer claims on insurance — under CIF the seller's minimum cover may be limited. For high-value steel, consider arranging your own cover.
Practical tips
- Always name the place: "CFR Dammam Port, Incoterms 2020".
- Match the Incoterm to your letter of credit or payment terms.
- Agree laytime and demurrage terms for breakbulk cargo.
- Ask for pre-shipment inspection on large orders.
- Make sure certificates and trade documents travel with the cargo (documents to request).
If you prefer not to manage imports yourself, request a delivered quotation to your Saudi site.