Under delivered duty paid (DDP), the seller is responsible for the cost of transporting goods until customs clears them for import at the destination. When the goods arrive there, you’ll have to organise customs clearance and delivery to your home/office/warehouse. The seller assumes the responsibility for all of the arrangement and transportation costs for shipping products to the agreed upon destination port. This typically will be an original insurance policy covering just that transaction or a certificate issued by the insurer under the seller’s existing open marine policy. The ICC established these terms to govern the shipping policies and responsibilities of buyers and sellers who engage in international trade. CIF Incoterms® meaning There are 11 Incoterms® rules in total, and CIF – standing for cost, insurance and freight – is one of four that relate only to waterbound transportation. However, risk is transferred to the buyer once the goods are loaded on the ship. The difference between CIF and CFR is that while the risk of loss or damage at delivery becomes the buyer’s, the seller is obliged to take out insurance for that risk and provide the buyer with a document which allows the buyer to claim against that insurance. If using CIP instead, insurance coverage defaults to all-risk; however, the parties may negotiate a lower coverage requirement. Common usage would be “CIF Buyer’s address” C&F means “cost and freight” which means the seller pays for shipping, but CIF means, Cost, Insurance and Freight (paid up to the destination mentioned). CIF risk transfer takes place when the merchandise is loaded onto the shipping vessel and is recommended for situations in which the seller is able to access the vessel directly, such as in the case of bulk cargo shipping. Free alongside (FAS) is a trade term that obligates a seller of goods for export to deliver those goods to a specific port right alongside a vessel designated by the buyer. CNF is similar to CIF, except insurance is not included. They must also give the buyer sufficient notice of delivery and provide proof of delivery and loading. ‘cost, insurance, freight’, a special type of sale of goods. Cost Insurance and Freight (CIF) Use of this rule is restricted to goods transported by sea or inland waterway. They are identical apart from an additional marine insurance policy paid for by the seller. A seller would be prudent to state in the contract not just they will provide an insurance document but state specific wording such as “One original insurance policy or certificate of marine insurance, for 110 percent of the invoice value, blank endorsed, covering Institute Cargo Clauses (C), Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo).” Anything more than that in an LC is just superfluous and often meaningless. Unlike some other Incoterms, the risk transfer point of the CIF Incoterm is not the same point as the cost transfer point. In CIF, exporter covers freight. There is a difference between CFR and CIF, which is that there is one additional responsibility on the seller. This makes CIF unsuitable for containerized cargo, which is usually dropped off at terminal days prior to loading. CIF Felixstowe (Cost, Insurance and Freight Felixstowe) CIF terms on the basis of the destination port being Felixstowe UK. The advantage to the seller is that it can often obtain cheap insurance and then build a larger amount into its selling price. For CNF, CAD, and CIF shipments, suppliers of the goods are held responsible for all freight-related charges. Meaning of FOB? Cost, insurance and freight (CIF) and free on board (FOB) are international shipping terms used to describe the transportation of goods between a seller and buyer. Cost, Insurance and Freight (CIF) Meaning. Cost, Insurance and Freight (CIF) are the expenditures that are borne by the seller in order to cover not just the regular costs but also the charges pertaining to the freight, and insurance for securing the losses (if any) that could arise out of probable damage or theft of a customer’s order while the same is in transit for being delivered to the port that is provided in the … Once the freight loads, the buyer becomes responsible for all other costs. The seller is not obliged to arrange insurance for pre-carriage in the export country or carriage in the import country unless this is specified elsewhere in the sales contract. CIF determines when the responsibility for goods transfers from the seller to the buyer. When purchasing internationally, the seller is responsible for exporting the cargo and shipping it until they arrive at the destination port, while insuring the cargo throughout the voyage. This is because unlike CIF, insurance isn’t a seller’s obligation under CFR and can also be acquired by the buyer. However, a buyer may stipulate that the seller is responsible until the goods reach a port of import or even their final destination. As with CFR and CIF, these terms can be less favourable for buyers, meaning less control and unexpected fees. International commercial terms—Incoterms for short—clarify the rules and terms buyers and sellers use in international and domestic trade contracts. CIF (Cost, Insurance and Freight) and CFR (Cost and Freight, sometimes called C&F or CNF) are widely used international shipping terms or Incoterms. It called Freight Prepaid (fee prepayment). Under CIF, the seller is responsible for the cost and freight of bringing the goods to the port of destination specified by the buyer. CIF stands for “cost insured freight”. Ex works (EXW) is a shipping arrangement in international trade where a seller makes goods available to a buyer, who then pays for transport costs. The transfer of risks also takes place at that time, in other words, the critical point of costs is equal to the critical point of risk transfer, just like FOB. Terms of Cost, Insurance, and Freight (CIF), Learn About the Free Carrier – FCA Delivery Option, Everything You Need to Know About Free Alongside (FAS), Ex Works (EXW) Shipping: When the Buyer Covers Transportation Costs. The disadvantage to the buyer can be that the insurer may well not be too enthusiastic about meeting any claim. Examples are requiring presentation of a policy but not a certificate of marine insurance; inserting nonsense words and requirement because “that is how the have always done it”. more Incoterms Definition The exact details of the sales contract will determine when the liability for the goods transfers from seller to buyer. See more. With CIF, responsibility transfers to the buyer when the goods reach the point of destination. As with the other “C” rules, a good choice for transactions involving letters of credit. Other typical expenses include customs duties, taxes, and the shipment of goods to their final location. C.i.f. CIF shouldn’t be used for air or land transportation, or for containerized goods. Note that some countries do not permit CIF imports, requiring the buyer to insure with an insurer in its own country. Although the seller is responsible for insurance, the risk transfers to the buyer before the main carriage. I believe you are looking for some clarification so see below. This is a trade term meaning that the seller must arrange for the carrying of goods by sea to a destination port as well as provide the buyer with any necessary documents to receive the goods from the carrier. Consider this hypothetical example: Best Buy orders 100 containers of flat-screen televisions from Sony using CIF to Kobe, a Japanese port. If your supplier quoted you a CNF Felixstowe price, it means that the price includes shipping of the goods via sea freight to the Felixstowe port. As defined in Incoterms® 2010, CIF means that the seller is required to deliver the goods on board the vessel or procures the goods already so delivered. The same shipping terms as CFR, plus a marine insurance policy also paid by the seller. These are global shipping terms which are used in international trade: CIF means Cost Insurance and Freight. Note that this insurance covers the buyer’s risk, because risk will pass from the seller to the buyer before the main carriage. If the importer wants insurance that covers a wider range, it must be … This creates a grey area during which cargo could unknowingly suffer damages. Both of these will normally show the seller as the “insured” or “assured” and will require the seller to endorse the document on the reverse such that the buyer or any bona fides holder with an insurable interest in the goods at the time of loss or damage occurred can claim. CIF means they will pay for the cost, the insurance and the freight, where CNF means the consignee is responsible for the insurance only. It is defined that insurance for CIF is insured under the FPA condition which is the insurance of the minimum collateral condition. Cost and freight (CFR) is a trade term obligating the seller to arrange sea transportation to a port of destination and provide the buyer with the documents necessary to obtain the goods from the carrier. The quoted price includes the cost of the goods, the cost of insurance while the goods are in transit and the cost of the freight to the destination. Freight is the charges for cargo transportation, traditionally by sea. The seller need only arrange minimum insurance cover, to the invoice value of the goods. FOB saves buyers money and provides control, but CIF helps sellers have a higher profit. Refer to CPT, obviously excepting the tip on the buyer arranging insurance. They are fairly common international commerce terms (incoterms) that were … The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of … What Is Cost, Insurance, and Freight (CIF)? CIF stands for Cost, Insurance, and Freight. Our HQ will contact you as quickly as possible to initiate the membership procedure. Until the goods are fully loaded onto a transport ship, the seller bears the costs of any loss or damage to the product. I suggest you to read these articles on CIF and DDP, so as to enable you to have a clear idea on these shipping terms. Uniform Commercial Code) but with international applications. CIF – COST INSURANCE AND FREIGHT (named port of destination): Seller must pay the costs and freight includes insurance to bring the goods to the port of destination. This rule and CIP (Carriage & Insurance Paid to) are the only two rules that place an obligation on the seller to arrange insurance for the consignment. For example, the parties to a contract must state the locale of the governing law for their terms. Where Is The Named Place For Handing Over Responsibility From The Seller To The Buyer? CIF – Cost, Insurance & Freight Cost, Insurance and Freight means that the seller delivers when the goods pass the ship's rail in the port of shipment. This makes CIF unsuitable for containerized cargo. Under CIF, the seller is responsible for the cost and freight of bringing the goods to the port of destination specified by the buyer. … CIF stands for `` cost, insurance and Freight ( CIF,. 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