Incoterms® 2020 Decision Matrix & Guide

Under FOB (Free On Board), you as the Dubai buyer nominate the freight forwarder and shipping line, negotiate your own ocean freight rates, and control the cargo from the moment it is loaded at the origin port. Under CIF (Cost, Insurance, and Freight), the foreign seller chooses the shipping line and pays freight and insurance to Jebel Ali Port. However, CIF often leaves Dubai buyers vulnerable to inflated destination terminal handling charges (DTHC) and delivery order release fees from the seller's appointed local agent.

Under EXW, the buyer is legally responsible for loading goods at the seller's warehouse and clearing export customs in a foreign country. Foreign customs authorities often require local tax registration or export licenses that foreign buyers lack. In contrast, FCA (Free Carrier) requires the seller to clear export customs in their home country while still allowing the UAE buyer full control over international shipping rates.

Yes, but with strict legal requirements. Under DDP (Delivered Duty Paid), the seller is responsible for paying UAE customs duty (5%) and import VAT (5%). However, Dubai Customs requires an active UAE trade license and customs business code to clear mainland shipments. Overseas sellers typically partner with a licensed UAE freight forwarder like VELO Logistics to act as the broker of record and customs declarant.

Under Incoterms® 2020, 7 terms apply to any mode of transport (air, road, rail, ocean container, or multimodal): EXW, FCA, CPT, CIP, DAP, DPU, and DDP. 4 terms apply exclusively to maritime and inland waterway transport for bulk and breakbulk cargo: FAS, FOB, CFR, and CIF. Modern containerized shipments should strictly use FCA, CPT, and CIP instead of FOB, CFR, and CIF.

The risk transfer point is the exact physical moment where legal responsibility for loss, damage, or theft of cargo passes from the seller to the buyer. It does not always coincide with who pays for the freight. For example, under CPT and CIF, the seller pays international freight to Dubai, but risk transfers to the buyer as soon as the cargo is loaded onto the first carrier at the origin origin.