Example of Cost, insurance and freight (CIF)

What is Cost, insurance and freight (CIF)?

Cost, insurance, and freight (CIF) is an international transportation agreement used when cargo is transported via waterway or sea. Under CIF, the seller is responsible for the shipping costs, insurance premiums, and freight of the buyer’s shipment. The full form of CIF is Cost, insurance, and freight....

Characteristics of Cost, insurance and freight (CIF)

Here are some distinctive characteristics of CIF:...

Example of Cost, insurance and freight (CIF)

As an example, suppose XYZ ordered 1,000 flat-screen televisions from Sony via a CIF agreement to the Japanese port of Kobe. Sony has delivered the product to the port and placed it on a ship for shipment. Once loading has been completed, Sony transfers the risk of loss to XYZ. In exchange, Sony pays the freight and shipping costs until the ordered products reach the buyer’s port of destination....

Advantages of Cost, insurance and freight (CIF)

CIF (Cost, Insurance, and Freight) provides a number of benefits for both buyers and sellers in certain situations:...

Disadvantages of Cost, insurance and freight (CIF)

While CIF (Cost, Insurance, and Freight) might provide benefits in some international trade transactions, it also has numerous downsides and possible problems that both buyers and sellers should be aware of:...

Difference between Cost Insurance Freight and Free On Board ( CIF vs. FOB )

Basis CIF FOB Full form The full form of CIF is Cost Insurance Freight. The full of FOB is Free On Board. Responsibility The seller is liable for the products and any related costs (including insurance and transportation) until they are delivered to the destination port under a CIF agreement. When the products are placed aboard the vessel at the port of origin, the risk is transferred from the seller to the buyer. The seller’s liability under a FOB agreement ceases when the items are put aboard the vessel at the port of origin. The buyer then bears responsibility for the items, including the cost, risk, and insurance throughout transportation to the destination. Cost Allocation The cost of products, insurance, and freight are often included in CIF rates. A clear, all-inclusive pricing may be appealing to buyers. FOB pricing usually covers only the cost of products. Buyers have greater control and visibility over the prices of insurance and shipping separately. Delivery Point When the products arrive at the destination port, they are deemed delivered. The seller is responsible for delivery until this point. When the items are placed aboard the vessel at the port of origin, they are deemed delivered. Any transportation from this point to the ultimate destination is the buyer’s responsibility....