CIF - Cost, Insurance and Freight (named port of destination)

The meaning of it is that the delivery is completed for the supplier when the product came on board the vessel, products have been insured by the supplier, and the vessel was hired by him to transport the goods to the destination port, which is established in the agreement. CIF is intended only for transporting goods by sea or inland waterway. Supplier pays export duty, packaging the goods and transportation of the cargo to the port, loads the goods on board, hires and pays the ship, insures the goods and provides the relevant documentation. Recipient unloads the vessel, pays import duty, relevant certificates, licenses, etc., delivers the goods to the point set in the agreement. CIF is designed to transport goods in bulk or in containers, and also for transportation of heavy equipment.

Who covers the logistics charges?

Distribution of costs according to the Incoterm negotiated in the contract. Classification according to the increased level of obligations for the seller.

Seller’s Obligations

• Goods, commercial invoice and documentation
• Export packaging and marking
• Export licenses and customs formalities
• Pre-carriage and delivery
• Loading charges
• Delivery at named port of destination
• Proof of delivery
• Cost of pre-shipment inspection
• Minimum insurance coverage

Buyer’s Obligations

• Payment for goods as specified in sales contract
• Discharge and onward carriage
• Import formalities and duties
• Cost of import clearance pre-shipment inspection

Bottom Line

Cost Insurance and Freight (CIF) is a well-established Incoterm that defines the responsibilities and obligations of buyers and sellers in international trade transactions. It offers clarity and risk protection, making it a popular choice for long-distance shipping by sea.

However, it’s crucial for both parties to understand the specifics of CIF agreements, including insurance coverage, the port of destination, and customs duties. As with any Incoterm, selecting the right one depends on the unique requirements of the transaction and the preferences of the parties involved.