Menu Close

What is difference between FOB and CIF?

Jim Brown

What is difference between FOB and CIF?

FOB vs CIF | Difference between FOB and CIF Meaning: FOB means free on board. The price includes all the expenses incurred until goods are actually loaded on board the ship at port of shipment. CIF stands for cost, insurance and freight.

What is CIF destination port?

CIF destination is the destination port or importer’s country’s port where the risk of goods is moved from the seller to the buyer. CIF destination is the nominated harbor that can be a commonly acknowledged place by both parties. The seller must carry out the freight proceedings till the destination port.

What is CIF and FOB price?

CIF – COST INSURANCE AND FREIGHT (named port of destination): Seller must pay the costs and freight includes insurance to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the ship. FOB – FREE ON BOARD (named port of shipment):

Which is best FOB or CIF?

The advantage of buying FOB is that the buyer can get better deals on freight services, unlike in CIF where the buyer has to rely on the freight services chosen by the seller. This is because the seller might be looking to make profit from the freight services. The buyer therefore makes profit from buying FOB.

What is the CIF value?

CIF (Cost, Insurance, Freight) A pricing term indicating that the cost of goods, insurance, and freight are included in the quoted price. Duty is calculated by adding all costs together.

What does CIF stand for in shipping terms?

CIF is a Shipping Incoterm that stands for: Cost, Insurance, Freight agreement, with the seller holding responsibility for all three. When purchasing internationally, the seller is responsible for exporting the cargo and shipping it until they arrive at the destination port, while insuring the cargo throughout the voyage.

How is cost, insurance, and Freight ( CIF ) different from CRF?

Other typical expenses include customs duties, taxes, and the shipment of goods to their final location. CIF is different from cost and freight provision (CRF) whereby sellers are not required to insure goods in transit. CIF is one of the international commerce terms known as Incoterms.

Is it good to buy goods on CIF terms?

Many CIF importers are unpleasantly surprised by substantial charges upon freight arrival. When you control your cargo through FOB terms, you can readily accumulate the TOTAL cost of freight for your goods.

What’s the difference between a CIF and a CIP?

The difference between CIF and CIP revolves around the amount of insurance the seller must obtain. CIF means cost, insurance, and freight, up to the port destination. CIP means carriage and insurance paid to the defined destination. For CIF, the seller needs to insure the cargo while aboard the ship.

What is difference between FOB and CIF?

Jim Brown

What is difference between FOB and CIF?

FOB vs CIF | Difference between FOB and CIF Meaning: FOB means free on board. The price includes all the expenses incurred until goods are actually loaded on board the ship at port of shipment. CIF stands for cost, insurance and freight.

Who pays CIF freight?

The seller
CIF is only used when shipping goods overseas or via a waterway. The seller has the responsibility for paying the cost and freight of shipping the goods to the buyer’s port of destination.

What does CIF mean in customs?

Cost and Freight Cost
Cost and Freight Cost Insurance Freight Under Cost and Freight (CFR) and Cost Insurance Freight (CIF), the seller is responsible for arranging and paying for the main carriage. The risk of damage and loss rests with the buyer.

Which is best FOB or CIF?

The advantage of buying FOB is that the buyer can get better deals on freight services, unlike in CIF where the buyer has to rely on the freight services chosen by the seller. This is because the seller might be looking to make profit from the freight services. The buyer therefore makes profit from buying FOB.

Is CIF shipping good?

The terms are also used for inland and air shipments. CIF is considered a better way to buy goods for those who are new to international trade. It might also be a better option for new traders who have small cargos. The buyer is therefore responsible for paying the ship’s freight and insurance.

What is FOB CIF and CNF?

In CIF and CNF, the shipper is responsible until unloading with one difference between the two types. CIF means they will pay for the cost, the insurance and the freight, where CNF means the consignee is responsible for the insurance only.

What is the CIF value?

CIF (Cost, Insurance, Freight) A pricing term indicating that the cost of goods, insurance, and freight are included in the quoted price. Duty is calculated by adding all costs together.

When does CIF Cost Insurance and freight take place?

Definition of CIF (Cost insurance and Freight) Incoterms 2020 dictates that the CIF Incoterm, or “Cost, Insurance and Freight”, is exclusive to maritime shipping. Under CIF, the seller is responsible for the cost and freight of bringing the goods to the port of destination specified by the buyer. CIF risk transfer takes place when …

Why do you need to buy CIF for shipping?

Why buy CIF? Importers generally buy CIF if they are new in international trade or they have very small cargo. It is a more convenient way of shipping since they don’t have to deal with freight or other shipping details, but you must realize that you are probably paying a lot more to get the goods than you should.

What does CIF stand for in letter of credit?

CIF (Cost insurance and Freight) and Letters of Credit With letters of credit, just as for FOB and CFR, the banks seem to have no problem, except they sometimes make a complete mess of the insurance clause.

What does it mean to buy fob or CIF?

An importer must look into the options of buying the goods under the terms that are more favorable to his or her expenses. So what does FOB and CIF means ? Seller must pay the costs and freight includes insurance to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the ship.