What’s the CIF Incoterms? What should the seller does under CIF condition? What should the buyer does under CIF condition? Why choose CIF Incoterms? When not choose CIF Incoterms? What should be paid special attention to when using CIF terminology
The Things You Should Know About CIF Incoterms
What's the CIF Incoterms?
What should the seller does under the CIF condition?
What should the buyer does under the CIF condition?
Why choose CIF Incoterms?
When not use CIF Incoterms?
What should be paid special attention to when using CIF terminology?
What’s the CIF Incoterms
Cost, insurance, and freight (CIF) is one of the 11 Incoterms that distinguish the responsibilities of buyer and seller, which requires seller to pay the cost, insurance,freight of the goods. To be specific, the goods are exported to the named port as stipulated in the contract. Until the goods are shipped to the final destination, the seller shall be responsible for the costs of any loss and damage to the goods. In addition, the seller shall cover the additional expenses, if any, such as customs duties and you name it. Following shows the specific responsibilities for seller and buyer under the terms of CIF:
Free On Board
Delivery to Port/Place
Export Customs Clearance
Origin Terminal Handling Charges
Destination Terminal Handling Charges
Delivery to Destination
Unloading at Destination
Import Duty, Taxes
Export Customs Clearance
What should the seller does under CIF condition
1.Goods, commercial invoice and document
1. Goods, commercial invoice and document
2. Export packaging and marking
3. Export licenses and customs formalities
4. Pre-carriage and delivery
5. Loading charges
6. Delivery on board vessel at named port of shipment
7. Proof of delivery
8. Cost of pre-shipment inspection
10. Main carriage
11. Discharge cargo at the destination port
What Should the Buyer Does Under FOB Condition?
1.Payment for goods as stipulated in sales contract
2.Import formalities and duties
3.Cost of pre-shipment inspection (for import clearance)
4. Deliver the goods to the final destination
Why choose the CIF Incoterms
For sellers, they will be able to make extra profit through handling freight and insurance. Besides, it will help improve seller’s weight in supply-purchase chain, thus it will increase the opportunity cost of the buyers if they intend to find another supplier. In other word, buyers will become increasingly rely on sellers under the CIF condition.
For buyer, they don’t have to negotiate freight rates, all they should do is just wait for the goods to arrive in the named port. It helps them simplified the purchase process.
When not choose the CIF Incoterms
It is recommend that if the sellers are not familiar with the foreign freight and thus find it difficult to calculate the freight, it’s better not to choose CIF Incoterms, otherwise, it might cause more cost and time waste in the trade process.
What should be paid special attention to when using CIF Incoterms?
A. the term "CIF" and "FOB" means both the delivery and the risk transfer occur on board the ship at the port of shipment. The seller completes its obligations upon loading the goods safely cross the board of the ship. The seller is no longer liable for the risks that may occur to the goods after shipment. The seller shall hand over the insurance policy, bill of lading, etc., to the buyer, and the buyer shall handle the risk claim, etc. After loading the goods at the port of shipment, the seller obtains the bill of lading and presents the main shipping documents to the bank or the buyer. After the buyer underwrites the insurance, and pays the sea freight and port of shipment miscellaneous charges, the full delivery obligation can be regarded as being completed.
B.Insurance shall be effected by the seller at the port of shipment and shall generally specify at the the amount of insurance, the risks and the applicable clauses, as well as the commencement and termination period of the insurance. The insurance policy shall be endorsed to the buyer by the bank upon presentation of the documents. The seller has no obligation to guarantee the exact arriving time of the goods. The seller shall not be liable for the damage, damp and loss of the goods after loading.
C. Unloading costs: terminal operation costs, etc., CIF generally uses PORT TO PORT, i.e. PORT TO PORT clause. The expenses at the PORT of shipment shall be borne by the seller, while the expenses at the PORT of destination shall be borne by the buyer.
Disclaimer: The content here is for informational purpose only. Seabay Logistics does not represent or endorse the accuracy or reliability of any advice, opinion, statement or other information provided.
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