What is the difference between CIF and 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 the difference between CIF and Incoterms?
Cost, insurance, and freight (CIF) is what a seller pays to cover the cost of shipping, as well as the insurance to protect against the potential damage of loss to a buyer's order. The two are part of a larger group of international trade rules known as Incoterms.
What is the difference between CIF and import?
Under CIF, the seller must export and pay the costs to ship to your destination port, but you must import and pay all costs associated with the importation. What is the difference between CIF and FOB?
What is the difference between CIF and marine insurance?
The difference between the two is that CIF requires marine insurance to be included, paid by the seller, that provides protection against any damages to the goods.
Is CIF better?
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.
Which is better FOB or CIF?
Buyers generally consider FOB agreements to be cheaper and more cost-effective. That's because they have more control over choosing shippers and insurance limits. CIF contracts, on the other hand, can be more expensive. Since the seller has more control, they may opt for a preferred shipper who may be more costly.
What is the main difference between FOB and CIF?
The major difference between FOB and CIF is when liability and ownership transfer. In most cases of FOB, liability and title possession shift when the shipment leaves the point of origin. With CIF, responsibility transfers to the buyer when the goods reach the point of destination.
Who pays CIF freight?
The sellerWho Pays CIF Freight? The seller must pay for the costs of transferring and shipping the freight as well as insuring the cargo until the goods have been delivered to the buyer's port.
Is CIF door to door?
CIF: Cost, insurance & freight You, the importer of the goods, are responsible for the unloading and customs clearance of the goods at the destination port, as well as pickup of goods, cargo insurance and delivery to the door at destination.
Does CIF include duty?
CIF does not include any import duties, VAT, or taxes. It does include all export requirements. Under CIF, the seller must export and pay the costs to ship to your destination port, but you must import and pay all costs associated with the importation.
How is CIF price calculated?
In order to find CIF value, the freight and insurance cost are to be added. 20% of FOB value is taken as freight. Means USD 200.00. Insurance is calculated as 1.125% - USD 13.00 (rounded off).
What is difference between CIF and DDP?
CIF (Cost, Insurance, and Freight) terms mean that the seller merely assumes responsibility for said goods until they reach the port of destination. DDP (Delivered Duty Paid) refers to the seller paying the duties and taxes of the shipment.
What is CIF price in shipping?
When goods are bought or sold via “Cost, Insurance, and Freight” (CIF) it means that the Seller is responsible for delivery of the goods to a ship, loading the goods onto the ship, and insuring the shipment until it reaches the port of destination.
What are the advantages and disadvantages of CIF?
Advantages and Disadvantages of CIF – Cost insurance and Freight. The advantage to the seller is that it can often obtain cheap insurance and then build a larger amount into its selling price. The advantage to the buyer is that it does not have to worry about declaring the shipment to its own insurer.
What does CIF 10% mean?
Q: What does “CIF+10%” mean? A: CIF+10% stands for: C = Cost/invoice value (purchase cost if your client is the buyer, or selling price if they are the seller) I = Insurance premium. F = Freight and associated charges (e.g. customs clearance charges)
Who bears the risk in CIF?
THE SELLERRISKS BORNE BY THE SELLER UNDER CIF CONTRACTS: The seller must bear all risks of loss of or damage to the goods until such time as they have passed the ship's rail[21] at the port of shipment.
What is CIF in shipping?
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. 1 2 The specific definitions vary somewhat in every country, but, in general, both contracts specify origin and destination information that is used to determine where liability officially begins and ends, and outline the responsibilities of buyers to sellers, as well as sellers to buyers.
What is the difference between CIF and FOB?
In CIF agreements, insurance and other costs are assumed by the seller, with liability and costs associated with successful transit paid by the seller up until the goods are received by the buyer. The responsibilities of the seller include transporting the goods to the nearest port, loading them on a vessel and paying for the insurance and freight. 2
Why is CIF more expensive?
This is because the seller uses a forwarder of his or her choice who may charge the buyer more in order to increase the profit on the transaction. Communication can also be an issue because the buyer relies solely on people who are acting on behalf of the seller. The buyer might still have to pay additional fees at the port, such as docking fees and customs clearance fees before the goods are cleared.
Do sellers prefer FOB or CIF?
While sellers often prefer FOB and buyers prefer CIF, some trade agreements find one method more convenient for both parties. A seller with expertise in local customs that the buyer lacks would likely assume CIF responsibility to encourage the buyer to accept a deal, for example.
Cost, Insurance, and Freight (CIF) vs. Free on Board (Fob): An Overview
Cost, Insurance, and Freight
- CIF is commonly used for large deliveries, including oversized goods, that are shipped by sea. The seller has the responsibility of loading the shipment onto the vessel. The seller covers the cost of shipping, and insurance. The seller also obtains the necessary documentation, licenses, and inspections that may be required. The buyer assumes full responsibility for the goods as soon a…
Free on Board
- Under a FOB agreement, the supplier assumes responsibility until the goods are loaded onto the shipping vessel. This means they pay for the goods to be transported to the port and onto the vessel. As such, the seller has a limited set of responsibilities under the contract. The goods are considered to be delivered into the control of the buyer as soon as they're loaded onto the ship. …
Key Differences
- The main differences between CIF and FOB lie in who assumes responsibility for the goods during transit. Under a CIF agreement, the seller assumes the costs and risks associated with transport until delivery, which is when the buyer assumes responsibility. With a FOB agreement, the seller transfers all of the risk and costs to the buyer once the sh...