Cost, insurance, and freight (CIF) is an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer’s order while the cargo is in transit. The goods are exported to the buyer’s port named in the sales contract.

What does CIF mean for shipping?

Cost, Insurance, and Freight
Cost, Insurance, and Freight (CIF) and Free on Board (FOB) are international shipping agreements used in the transportation of goods between a buyer and a seller. They are among the most common of the 12 international commerce terms (Incoterms) established by the International Chamber of Commerce (ICC) in 1936.

What is FOB and CIF in shipping?

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. CIF price includes free on board and charges of Freight and marine insurance.

What does LC at sight mean?

sight letter of credit
What is the meaning of LC at sight? A sight letter of credit is a document which stands as a proof of payment in return of the goods or services to be released for the transportation by the seller. Once the goods or services reach the buyer, the buyer has to pay the financial institution that provided the Sight LC.

What’s the 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 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.

When does the buyer become responsible for the freight?

Once the freight loads, the buyer becomes responsible for all other costs. CIF is similar but not the same as carriage and insurance paid to (CIP). Cost, insurance, and freight (CIF) is a common method of import and export shipping. CIF determines when the responsibility for goods transfers from the seller to the buyer.

When does responsibility for goods transfer from seller to buyer?

CIF determines when the responsibility for goods transfers from the seller to the buyer. CIF is one of the international commerce terms known as Incoterms. The contract terms of CIF define when the liability of the seller ends and the liability of the buyer begins. CIF is a conventional method of shipping goods for importers.

Who is responsible for freight charges under CIF Incoterms?

When shipping under CIF Incoterms, the transfer of possession beings once the goods are loaded safely onto the boat, but the seller is responsible for paying freight charges and procuring the shipping insurance. This means the seller pays for all costs associated with moving the cargo until the goods arrive at the destination port.

How is a CIF contract different from a sale of goods?

Nor can the vendor withhold the documents and tender the goods. Furthermore, the performance of a CIF contract is fulfilled by delivery of the documents and not by the actual delivery of the goods by the vendor. Accordingly, it has been argued that a CIF contract is not a sale of goods but a sale of documents.