type
concept
created
Tue Apr 07 2026 02:00:00 GMT+0200 (Central European Summer Time)
updated
Tue Apr 07 2026 02:00:00 GMT+0200 (Central European Summer Time)
sources
raw/articles/PRD
tags
incoterms shipping pricing trade-terms logistics

Incoterms in Paper Trading

abstract
The marketplace supports seven Incoterms (EXW, FCA, FOB, CFR, CIF, DAP, DDP) that define the split of costs, risks, and responsibilities between seller (mill) and buyer in international paper transactions.

Overview

Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce that define who pays for what in a transaction. In paper trading, the incoterm determines whether the price per MT includes freight, insurance, customs duties, or just the paper at the mill's loading dock. The marketplace stores and displays incoterms on every surplus item, mill default setting, and buyer preference to ensure price comparisons are on an apples-to-apples basis.

Supported Incoterms

Incoterm Full Name Seller's Responsibility
EXW Ex Works Buyer arranges everything from seller's premises. Seller just makes goods available at their location. Lowest price for seller.
FCA Free Carrier Seller delivers goods to a carrier at a named place. Most common in European paper trading.
FOB Free On Board Seller loads goods onto the vessel at the port of origin. Risk transfers when goods cross the ship's rail.
CFR Cost and Freight Seller pays freight to destination port but risk transfers at origin port. Buyer handles insurance.
CIF Cost, Insurance, Freight Seller pays freight AND insurance to destination port. Higher price reflects more seller responsibility.
DAP Delivered At Place Seller delivers to the buyer's named place (unloaded). Seller bears almost all risk and cost except unloading and import duties.
DDP Delivered Duty Paid Seller handles everything including import duties, taxes, and customs clearance. Highest price, maximum seller responsibility.

Incoterm Spectrum

From buyer's perspective, the cost responsibility increases from left to right:

EXW --> FCA --> FOB --> CFR --> CIF --> DAP --> DDP
(buyer pays everything)                 (seller pays everything)

From seller's perspective, the price quote increases from left to right because more costs are included. An EXW price of EUR450/MT might become EUR500/MT CFR or EUR520/MT CIF for the same paper.

Usage in the Marketplace

Mill Default Incoterm

Each mill has a default_incoterm field. European mills commonly default to FCA (seller delivers to carrier). This becomes the incoterm for their surplus items unless overridden per item.

Surplus Item Incoterm

Every SurplusItem has a required incoterm field (NOT NULL). The price_per_mt is quoted under this incoterm. When comparing prices across surplus items, the incoterm must be considered -- an EXW price of EUR430/MT may be cheaper than a CIF price of EUR480/MT once freight is added, or more expensive depending on the route.

Buyer Preferences

Buyers store preferred_incoterms as an array. A buyer in Valencia, Spain might prefer FCA or CIF. This preference informs newsletter presentation and container proposal calculations.

Price Adjustments

The geographic visibility system applies price adjustments per destination. These adjustments are additive to the base price under the stated incoterm. For example, a surplus item priced at EUR465/MT FCA with a +EUR15 adjustment for Tunisia becomes EUR480/MT FCA for Tunisian buyers.

Incoterms and Container Proposals

When the container assembly algorithm estimates freight costs, the incoterm determines the baseline:

The freight comparison display accounts for incoterms when calculating the actual cost to the buyer.

Real-World Context

From the PRD's market data, Mara's surplus list from Holland shows destination-based pricing that reflects different freight and market conditions (not explicit incoterms, but the same principle):

These differences partially reflect the freight cost differential to each destination under the quoted incoterm.

Sources

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