Incoterms are the 11 standard trade terms published by the International Chamber of Commerce (ICC) that decide who pays for freight, insurance and customs, and where the risk passes from seller to buyer. This guide explains Incoterms 2020 in plain language, compares EXW, FOB, CIF and DDP for shipments to Bahrain, and shows how the term you agree changes your landed cost.
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Incoterms (International Commercial Terms) are three-letter codes such as EXW, FOB, CIF and DDP that you write next to a named place on your quote, invoice and sales contract — for example FOB Shanghai or CIF Khalifa Bin Salman Port. The current version, Incoterms 2020, took effect on 1 January 2020. Each term answers the same practical questions, so buyer and seller never argue about who pays for what.
Every Incoterm Decides 3 Things:
Who pays each leg of freight and insurance Where the risk passes from seller to buyer Who handles export and import customs clearanceIncoterms 2020 has 11 rules in two groups. Seven work for any mode of transport, including air freight, trucks across the causeway and containers: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Four are only for sea and inland waterway: FAS, FOB, CFR and CIF. The 2020 edition replaced DAT with DPU and raised the insurance cover required under CIP. Remember that Incoterms do not fix the price, the payment method or when ownership passes — those belong in your sales contract.
Under EXW (Ex Works) the seller simply makes the goods available at its own premises. You, the buyer, arrange loading, export clearance in the seller’s country, the main freight, insurance and Bahrain customs. EXW looks cheapest on paper but leaves you with the most work and risk abroad. Under FOB (Free On Board) the seller clears the goods for export and loads them on the vessel at the named port of shipment. The risk passes to you once they are on board, and you pay the sea freight, insurance and import costs. Many Bahrain importers prefer FOB because they can choose their own forwarder and compare freight rates.
CIF (Cost, Insurance and Freight) means the seller pays the sea freight to your named port in Bahrain and buys cargo insurance for you. CFR is the same but without the insurance. The catch: under both CIF and CFR the risk still passes to you when the goods are loaded at the origin port, and CIF only requires minimum insurance cover (Institute Cargo Clauses C, at 110% of the contract value). The seller also picks the shipping line, so charges on arrival can be higher than expected. Compared with FOB, CIF is simpler to buy but gives you less control over cost and transit time.
DAP (Delivered at Place) means the seller pays to bring the goods to your named address or terminal in Bahrain, ready for unloading, while you pay the import duty, VAT and customs clearance. DPU is similar, but the seller also unloads. DDP (Delivered Duty Paid) puts the most work on the seller: transport, import clearance, duty and VAT are all included in the price. DDP is convenient for small buyers, but it only works if the seller or its forwarder can clear customs in Bahrain on your behalf — so always confirm who is the importer of record before you accept a DDP quote.
Bahrain applies the GCC common customs tariff, generally 5% duty on the CIF value of the goods plus 10% VAT. Customs look at what the goods cost delivered to Bahrain, so on an EXW or FOB purchase the freight and insurance are added to the invoice value before duty is worked out — choosing EXW does not lower your duty. What the Incoterm does change is who pays these charges and when. Keep your commercial invoice, packing list and bill of lading or air waybill consistent with the agreed term, and Oreem’s customs team can clear the shipment and deliver it to your door.
Official sources: Bahrain Customs · NBR (VAT)
The same shipment can be quoted on different Incoterms. Compare what the seller covers and what is left for you before you accept a price:
Whatever term your supplier quotes, Oreem arranges the missing legs — pickup, air or sea freight, customs clearance and delivery to your door in Bahrain. Pick your origin:
Incoterms are 11 standard trade terms published by the International Chamber of Commerce. Each one sets who pays for freight, insurance and customs, and where the risk passes from seller to buyer. The current version is Incoterms 2020.
Under FOB the seller loads the goods on the ship and you pay the sea freight and insurance. Under CIF the seller pays the freight and minimum insurance to your port. In both cases the risk passes to you when the goods are loaded at the origin port.
DDP means Delivered Duty Paid. The seller delivers the goods to your named place and pays the transport, import clearance, duty and VAT. It is the most complete term for the buyer, but the seller must be able to clear customs in Bahrain.
For most sea shipments, FOB gives Bahrain importers the best balance of cost and control, because you choose the forwarder. For small or first orders, DDP or DAP is simpler. EXW suits buyers whose forwarder can handle export clearance abroad.
No. Bahrain customs generally charge 5% duty on the CIF value plus 10% VAT, so freight and insurance are added on an EXW or FOB purchase. The Incoterm only decides who pays these charges.
Incoterms 2020, the current version published by the International Chamber of Commerce, took effect on 1 January 2020 and contains 11 rules.
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Incoterms & quotes
Which Incoterm should I ask my supplier for?
For sea shipments FOB usually gives you the most control over freight cost. For small orders, a DAP or DDP price is simpler.
Can Oreem ship goods bought on EXW or FOB terms?
Yes. We coordinate with your supplier, arrange air or sea freight to Bahrain, clear customs and deliver to your door.
Customs & duties
How much is customs duty in Bahrain?
Generally 5% GCC customs duty on the CIF value of the goods, plus 10% VAT.
Who pays duty under DDP?
Under DDP the seller pays the import duty and VAT. Under every other Incoterm, you as the buyer pay them.
Delivery & payment
Do you deliver to my door in Bahrain?
Yes. We deliver to your exact address in any governorate — not a depot or post office.
Do you collect cash on delivery in Bahraini Dinar?
Yes. We collect cash or card on delivery in BHD and settle it back to the sender.
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