Cost, insurance, and freight (CIF) is an international shipping term that describes the seller’s responsibility for the cost of shipping, freight charges, and insuring the cargo being shipped via ocean or waterway. ... However, the buyer assumes responsibility for the goods once the cargo has reached the buyer’s port.
What is difference between FOB and CIF?
In CIF, the seller is responsible for transporting goods to the nearest port , loading the goods on the ship and paying freight for the goods to be delivered to a port chosen by the buyer. ... In FOB trading, the seller is only responsible for taking the goods to the nearest port on his or her end.
Which is better FOB or CIF?
It is advised to go with the FOB option for shipping as the buyer gets control over the shipping process and the costs are comparatively cheaper. Whereas in CIF shipping, since the seller has the authority over shipping charges and arranging a ship with the help of a freight forwarder, the cost is higher.
How is CIF calculated?
In order to find CIF value, the freight and insurance cost are to be added. 20% of FOB value is taken as freight. ... Insurance is calculated as 1.125% – USD 13.00 (rounded off). The total amount of CIF value works out to USD 1313.00.
Who pays for CIF freight?
Under CIF the seller is responsible till the goods are loaded onboard the vessel and he also pays for the freight and insurance charges, while in FOB the seller is only responsible for getting the goods loaded onto the vessel and is not responsible for freight and insurance charges.
What is FOB CIF and CNF?
These are freight on board (FOB) and cost net freight (CNF) . Other terms such as cost net insured (CIF) and cash against document/delivery (CAD) are also used. ... A prepaid basis shipment means the buyer will pay the freight charges before the shipment occurs.
Does CIF include duty?
CIF is an international agreement between a buyer and seller in which the seller has responsibility for the cost, insurance, and freight of a sea or waterway shipment. ... Some of these costs include fees for shipping, export customs clearance, duty, and taxes.
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. See below for example.* Invoice Value.
Whats CIF price?
CIF (CFR) – Cost, Insurance and Freight – The seller pays for everything up to and including the freight to a named destination port, the first charge to the buyer is the terminal handling at the destination port.
What is FOB price?
Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. ... “FOB origin” means the purchaser pays the shipping cost from the factory or warehouse and gains ownership of the goods as soon as it leaves its point of origin.
How do you quote CIF price?
Cost, insurance, and freight to a named overseas port. The seller quotes a price for the goods (including insurance), all transportation, and miscellaneous charges to the point of debarkation from the vessel . (The term is used only for ocean shipments.)
What is CIF price in export?
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. ... The seller must clear the goods for export.
How is custom value calculated?
Customs Value is the total value of all items in your shipment and determines how much import duty the package recipient must pay . For example, if you are shipping 10 dresses each valued at US$25.00 (or local currency equivalent), then you would enter a customs value of US$250.00.
Can CIF be used for air freight?
CIF cannot be used for air freight . CIF is only designated for ocean freight and waterway shipments. Buyers and sellers wishing to use CIF for air shipments can substitute CIF for CIP, which stands for carriage insurance paid to the destination.
What is FOB and CIF price?
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. The seller meets cost of goods, freight and marine insurance. ... So, the seller prefers FOB price.
What does CIF insurance cover?
By definition CIF refers to the port of destination. CIF also obligates the seller to provide insurance covering the buyer’s risk of loss or damage which in almost all cases extends until the goods are delivered to his place of destination. Banks are usually involved in the financing of CIF shipments.
