Watch: CIF vs FOB Shipping Explained
Watch this short video to understand the differences between CIF and FOB, including who arranges ocean freight, who provides cargo insurance and when risk transfers to the buyer.
Quick Overview
Under both CIF and FOB, the seller clears the goods for export and delivers them on board the vessel at the origin port. Risk transfers to the buyer when the goods are on board.
Under FOB, the buyer arranges the main ocean freight. Under CIF, the seller pays for transportation to the named destination port and obtains the required minimum cargo insurance.
Video Transcript
“What is the difference between CIF and FOB shipping?
Under both CIF and FOB, the seller clears the goods for export and risk transfers to the buyer when the cargo is loaded on board the vessel at the origin port.
The main differences concern ocean freight and insurance:
Under FOB, the buyer arranges and pays for the main ocean freight.
FOB does not require either party to obtain cargo insurance.
Under CIF, the seller pays freight to the named destination port.
Under CIF, the seller obtains the required minimum cargo insurance.
The buyer generally handles import clearance, duties and taxes under both terms.
An important distinction: under CIF, the seller pays for transportation to the destination port, but risk still transfers when the goods are on board the vessel at the origin port.
CIF and FOB apply to sea and inland waterway transport. For containerized cargo delivered to a terminal before vessel loading, FCA or CIP may be more appropriate depending on the shipment arrangement.”
Compare CIF and FOB Responsibilities
This video provides a short comparison. Read the complete CIF Incoterm guide and FOB Incoterm guide for detailed information about costs, insurance, customs responsibilities and risk transfer.
You can also explore all Incoterms to compare other international trade terms.
