CIF (Cost, Insurance & Freight)

Incoterms, also known as international commercial terms, are set to eliminate or decrease confusions and conflicts between buyers and sellers in international trade and to facilitate the trade and commerce process globally. Incoterms were created by the International Chamber of Commerce (ICC) in 1936 and since then, they are updated on a regular basis to suit changing trade trends.
EXWFCACPTCIPDAPDPUDDPFASFOBCFRCIF
Free CarrierCarriage Paid ToCarriage Insurance Paid ToDelivered at PlaceDelivered at Place UnloadedDelivered Duty PaidFree Alongside ShipFree On BoardCost & FreightCost, Insurance & Freight
Charges/FeesEx Works
At a named place, the seller transfers the goods to the buyer; the buyer is responsible for all risks.1.) when seller loads goods to buyer’s carrier or 2.) when goods are at the buyer’s disposal & ready for unloading at a named placedwhen the goods are handed over to the seller’s nominated carrier at a named placewhen the goods are handed over to the seller’s nominated carrier at a named placewhen the goods are placed at the buyer’s disposal at a named place or agreed point within that placewhen the goods are delivered and unloaded at a named place or agreed point within that placewhen the goods are placed at the buyer’s disposal at a named place or agreed point within that placewhen goods are alongside the vessel nominated by the buyer at named portwhen goods are on board the vessel nominated by the buyer at named portwhen the goods are on board the vessel nominated by the seller at originwhen the goods are on board the vessel nominated by the seller at origin
Risks Transfer
Commercial InvoiceSellerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Packaging & QCSellerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Loading & DeliveryBuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Export Duty & TaxesBuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Origin Terminal HandlingBuyerBuyerSellerSellerSellerSellerSellerBuyerSellerSellerSeller
Cargo InsuranceNegotiableNegotiableNegotiableSellerNegotiableNegotiableNegotiableNegotiableNegotiableNegotiableSeller
Carriage ChargesBuyerBuyerSellerSellerSellerSellerSellerBuyerBuyerSellerSeller
Destination Terminal HandlingBuyerBuyerSellerSellerSellerSellerSellerBuyerBuyerBuyerBuyer
Delivery to DestinationBuyerBuyerSellerSellerSellerSellerSellerBuyerBuyerBuyerBuyer
Unloading at DestinationBuyerBuyerBuyerBuyerBuyerSellerBuyerBuyerBuyerBuyerBuyer
Import Duty & TaxesBuyerBuyerBuyerBuyerBuyerBuyerSellerBuyerBuyerBuyerBuyer
Incoterms 2020
CIF

Among the full list of Incoterms approved by ICC, CIF is an acronym for Cost, Insurance, and Freight, and it refers to the seller’s obligation for all three. When buying anything from another country, the seller is responsible for exporting the cargo and transporting it till it arrives at the target port, as well as protecting the cargo along the journey.

When exporting under CIF Incoterms, ownership passes to the buyer after the cargo is securely loaded on the boat, but the seller is responsible for paying duty and obtaining shipping insurance. This means that the seller is responsible for all shipping costs until the goods reach the target port. The buyer is liable for the import procedure as well as the costs of moving the cargo through customs and getting the goods to their final destination.

CIF only applies to ocean freight; it does not apply to other modes of transportation. This Incoterm is most usually used when shipping full containers, however, it can also be used for smaller container loads.

What Are the Responsibilities of the Buyers and Sellers in CIF Incoterm?

Let’s look at the seller’s and buyer’s specific duties when agreeing to a sale under the CIF incoterm.

Seller’s Responsibility Under CIF

  • Delivery of goods and documents
  • Packaging
  • Inland transportation in the origin country
  • Customs handling fees in the origin country
  • Charges in the origin country
  • International shipping
  • Cargo insurance

Buyer’s Responsibility Under CIF

  • Goods, Duties, and Taxes payment
  • Charges in the destination country
  • Customs handling fees in the destination country
  • Inland transportation in the destination country

Cargo Insurance in CIF

The seller is contractually obligated to provide insurance for the goods’ transportation under CIF. CIF and CIP are the only two Incoterms that force the seller to supply insurance.

In practice, customers prefer the CFR Incoterm if they can obtain higher cargo insurance coverage. This is due to the fact that, unlike CIF, insurance is not a seller’s responsibility under CFR and can be obtained by the buyer as well.

FAQ

What does CIF stand for?

CIF is an acronym for Cost, Insurance, and Freight.

What shipping method is CIF suitable for?

CIF can only be used for ocean freight. It can not be used for any mode of transportation.

Who is responsible for cargo insurance under CIF?

The seller is contractually obligated to provide insurance for the goods’ transportation under CIF.

Which party is accountable for the payment of duties and taxes under CIF?

It’s one of the buyer’s responsibilities to pay for customs duties and taxes.

How is CIF different from CIP?

CIF and CIP are the only two Incoterms that force the seller to supply insurance

faq -

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More