Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. They are among the most common of the 12 international commerce terms Incoterms established by the International Chamber of Commerce ICC in CIF is considered a more expensive option when buying goods.
This is because the seller uses a forwarder of his or her choice who may charge the buyer more in order to increase the profit on the transaction.
Communication can also be an issue because the buyer relies solely on people who are acting on behalf of the seller. The buyer might still have to pay additional fees at the port, such as docking fees and customs clearance fees before the goods are cleared.
FOB contracts relieve the seller of responsibility once the goods are shipped. After the goods have been loaded—technically, "passed the ship's rail,"—they are considered to be delivered into the control of the buyer. When the voyage begins, the buyer then assumes all liability. With FOB contracts, when the voyage begins, the buyer assumes all liability for the shipped goods.
In CIF agreements, insurance and other costs are assumed by the seller, with liability and costs associated with successful transit paid by the seller up until the goods are received by the buyer. The responsibilities of the seller include transporting the goods to the nearest port, loading them on a vessel and paying for the insurance and freight. In some agreements, goods are not considered to be delivered until they are actually in the buyer's possession; in others, the goods are considered delivered—and are the buyer's responsibility—once they reach the port of destination.
Each agreement has particular advantages and drawbacks for both parties. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. What Is CIF? Understanding CIF. CIF vs. Free on Board FOB. Example of CIF. The Bottom Line. Key Takeaways: Cost, insurance, and freight CIF is an international commerce term and only applies to goods shipped via a waterway or ocean.
With cost, insurance, and freight, the seller covers the costs, insurance, and freight of a buyer's order while in transit. Once the cargo has been delivered to the buyer's destination port, the buyer assumes responsibility for the costs of importing and delivering the goods.
The buyer takes ownership of the goods once on the ship, and if the cargo is damaged during transit, the buyer must file a claim with the seller's insurance company. Know Your Incoterms There are seven Incoterms rules for any type of transport and four Incoterms rules for sea and inland waterway transports.
Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.
Investopedia does not include all offers available in the marketplace. It requires sellers to deliver goods to a buyer at an agreed port of arrival. A seller meets its obligation upon delivery of uncleared goods. CPT or Carriage Paid To is an international trade term denoting that the seller incurs the risks and costs associated with delivering goods to a carrier. Ex works EXW is a shipping arrangement in international trade where a seller makes goods available to a buyer, who then pays for transport costs.
Delivered Ex Quay DEQ : Getting Goods to a Destination Port Delivered ex quay, in international trade, refers to a contract specification where the seller must deliver the goods to the wharf at the destination port.
Partner Links. Related Articles. The U. If the seller fails to complete the documentation, it is the buyer who sustains the fine. In some cases, a CIF incoterm may be inapplicable. CIF is unsuitable for containerized cargo, as the shipments are often left at the terminal for several days before loading on the carrier vehicle.
As the seller only assumes the risk once the cargo is onboard, there is ambiguity about who is liable should the goods sustain damage during this time. Sellers have also found little success with fresh product supply chain coordination under the CIF business model due to uncertain shipping times, irregular customer demand and poor quality control.
Circumstances where CIF is used include breakbulk cargo, including commodities or locations where the seller owns, operates or controls the port. Final Thoughts Familiarizing yourself with the components of shipping, along with current shipping trends, can help you decide on the best incoterm options for you.
To find out how Air Sea Containers can use efficient packaging options to lower your shipping costs, call us at Also, the seller is responsible in case of any inspections. The seller is responsible for arranging and paying for transportation to the port of destination. The seller is also responsible for all export formalities. While the seller pays for transportation and insurance to the port of destination, the risk for the cargo transfers to the buyer the moment the shipment is loaded on the vessel.
The seller is responsible for all costs related to exporting the shipment from the country of origin. The risk for the shipment passes to the buyer when the shipment is loaded onto the vessel. The buyer is responsible for unloading the goods off the ship at the port of destination. Costs for offloading and onward transportation at the port of destination are for the buyer.
0コメント