The essential difference between CIF and FOB

Cost Insurance and Freight , Note: CIF is limited to shipping and domestic trade transportation.

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The essential difference between CIF and FOB

CIF is cost plus freight plus insurance (...specified port of destination), and delivery is completed when it is loaded onto the carrier's ship at the port of 


The following is a detailed explanation of the components and meaning of the international trade term CIF:

Although CIF is for the seller to arrange the transportation of goods and apply for freight insurance, the seller does not assume the obligation to ensure 

that the goods are delivered to the agreed port of destination, because CIF is a term for delivery by shipment, not a term for delivery at the port of destination, 

that is, Saying CIF is not "CIF".

The essential difference between CIF and FOB:

The location where costs and risks are allocated in the CIF term are separated from each other (it is different from the FOB term, where the costs and risks

 are allocated at the same place.) While the allocation of costs in CIF is the designated port of destination, the allocation of risks is shipment. The harbor is 

bounded by the ship's rail.

Division of risk responsibilities in CIF trade terms:

  1. 1. Only require the seller to carry minimum insurance coverage. If the buyer requires higher insurance coverage, it will need to reach an explicit agreement

 with the seller or make additional insurance arrangements on its own.

  1. 2. The seller is required to go through the customs clearance procedures for the export of goods, and the buyer is required to go through the customs

 clearance procedures for the import of goods.

  1. 3. The seller must also apply for marine insurance against the risk of loss or damage of the buyer’s goods during transportation.


  2. The essential difference between CIF and FOB

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