What is CIF? What is FOB? Difference between CIF and FOB

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In import and export of goods. CIF and FOB delivery terms are always the top concern. So what exactly is CIF? What is FOB? And what is the difference between CIF and FOB? Find out all this information through the article below!

What is CIF?

CIF (short for Cost, Insurance, Freight - freight, insurance, freight). As the delivery condition at the port of loading and unloading. In international sales contracts, this delivery condition is usually written immediately with a certain seaport name. For example CIF Thi Vai Port.

For CIF delivery terms, the seller will take the goods from the warehouse to the port. All costs of customs clearance, shipping costs, cargo insurance, etc. are included in the CIF.

What is FOB?

FOB (an abbreviation of Freight on Board) is a condition of delivery of the liability of the seller when the goods have arrived on the deck. This means that when the goods have not been loaded, the responsibility lies with the seller. On the contrary, after the goods have been loaded onto the ship when all risks and liabilities are passed on to the buyer.

In terms of FOB purchase, ship's rail is considered a risk transfer point. FOB price will not include expenses such as transportation, insurance to the destination, transportation costs, freight insurance and other costs incurred during transportation.

Compare the differences between CIF and FOB

Currently, CIF and FOB are the two most commonly used delivery terms. So what is the difference between CIF and FOB? Below is a comparison from LEC Group's water transport experts.

Similarities between CIF and FOB:

• Both are conditions of delivery in Incoterm 2010 recommended for international and inland water transport.

• Are the 2 most common delivery terms used today?

• The positions of responsibility transfer and risks are both at the port of loading (port of departure).

• The responsibility of carrying out export customs clearance rests with the seller). The procedure for importing goods belongs to the buyer (buyer).

Differences between CIF and FOB:

• Conditions in Incoterm: CIF terms - freight, insurance, freight, FOB delivery conditions - delivery on board.

• Liability of charter ship: CIF - seller must find the ship, the buyer is not responsible for finding the ship. FOB - seller does not need to hire a ship, the buyer is responsible for book ship.

• Insurance: CIF - the seller is responsible for signing an insurance contract for the exported consignment, usually providing a policy of insurance of at least 110% of the value of the goods. FOB - seller does not have to buy insurance.

• The final place to terminate the contractual obligations: although both the terms of delivery of CIF and FOB have the same position of risk transfer as the ship's rail. However, for CIF, you have the final responsibility when the goods have reached the port of discharge (port of destination).

Above is all information related to CIF and FOB. As well as a comparison of the differences between CIF and FOB from LEC Group's shipping experts. If you are looking for a reputable and professional provider of inland and international water transport services in Vietnam. Please contact us today to receive the best support!

LEC GROUP

Head Office: Road 4, Phu My 1 Industrial Zone, Phu My Ward, Phu My Town, Ba Ria - Vung Tau, Vietnam.

Add: No. 28 Thao Dien Street, Thao Dien ward, District 2, Ho Chi Minh City, Viet Nam.

Hotline: (+84) 909 800 136 & (+84) 901 388 136.

Email: info@lecvietnam.com & thao.nguyen@lecvietnam.com

Website: https://lecvietnam.com/

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