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Cost, Insurance, Freight Agreements: Learn the Responsibilities, Advantages, and Disadvantages of Using a CIF Shipping Agreement
Table of ContentsWhat does CIF stand for in Shipping Terms?CIF is a Shipping Incoterm that stands for: Cost, Insurance, Freight agreement, with the seller holding responsibility for all three. 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. When shipping under CIF Incoterms, the transfer of possession beings once the goods are loaded safely onto the boat, but the seller is responsible for paying freight charges and procuring the shipping insurance. This means the seller pays for all costs associated with moving the cargo until the goods arrive at the destination port. The buyer is responsible for the import process and the costs associated with bringing the shipment through customs and delivering the products to their final destination. CIF only applies to sea or waterway shipments, and no other forms of shipping. This shipment method is most commonly used when shipping full containers; however, it is possible to use this Incoterm on less than container loads as well. What are the Buyers and Sellers Responsibilities with CIF Agreements?Let’s explore the individual responsibilities for the seller and the buyer when agreeing to a sale under the CIF incoterm. Sellers ResponsibilitiesWhen a seller is quoting CIF as their Shipping Incoterms, they agree to take on the full burden of exporting and shipping the cargo, up until the goods arrive aboard the vessel. Once the goods are safely loaded onto the boat, the buyer takes over responsibility for the shipment and assumes responsibility to import and carry the products to the final destination. The seller holds responsibility that goes well beyond ensuring the cargo is placed on to a container ship. Their full responsibilities include:
Buyers ResponsibilitiesOne the cargo is loaded onto the vessel, the seller transfers the shipment and all risks to the buyer. When the buyer is in control of the shipment, their responsibilities are as follows:
Advantages and Disadvantages for the BuyerWhen trading under a CIF agreement, there are significant advantages for the buyer, making the purchasing process easier. However, the disadvantages often outweigh the benefits for more experienced buyers. Advantages
Disadvantages
When to Use a CIF Agreement?
CIF Agreement FAQ’sDoes CIF include duty?No, it’s the buyer’s responsibility. CIF does not include any import duties, VAT, or taxes. It does include all export requirements. Under CIF, the seller must export and pay the costs to ship to your destination port, but you must import and pay all costs associated with the importation. What is the difference between CIF and FOB?CIF requires the seller to export the cargo, get the cargo loaded onto the ship, and pay the costs to ship to the destination port. FOB requires the seller only to export the cargo and load the goods onto the ship. FOB allows the buyer to have more control in the shipping process, and choose their preferred shipping company. What is the difference between CIF and CIP?The difference between CIF and CIP revolves around the amount of insurance the seller must obtain. CIF means cost, insurance, and freight, up to the port destination. CIP means carriage and insurance paid to the defined destination. For CIF, the seller needs to insure the cargo while aboard the ship. For CIP, they must insure the full transportation. Can CIF Incoterms be used for small parcel shipments?CIF can only be used for ocean shipments. The size of the parcel does not matter, nor does the type of container the cargo is being shipped by. CIF can be used for less than container load (LCL), and full container load (FCL). Can CIF Incoterms be used for air freight?CIF cannot be used for air freight. CIF is only designated for ocean freight and waterway shipments. Buyers and sellers wishing to use CIF for air shipments can substitute CIF for CIP, which stands for carriage insurance paid to the destination. With this Incoterm, the seller must insure the cargo to the defined destination. Need a Shipping Quote?Get the Best shipping rate from China, guaranteed.Was bedeutet CIF?Bedeutungen: [1] cost, insurance and freight (Kosten, Versicherung und Fracht)
Was ist in CIF enthalten?Der CIF-Preis ist im Außenhandel der auf den Incoterms beruhende Preis für den Import einer Ware, der sämtliche Kosten (englisch Cost), Versicherungen (englisch Insurance) und Fracht (englisch Freight) einschließt.
Was bedeutet FOB und CIF?FOB steht als Kürzel für “Free On Board” (= frei an Bord). CIF ist die Abkürzung für “Cost Insurance Freight” (= Kosten, Versicherung und Fracht).
Was ist der Unterschied zwischen CIF und CIP?CIP ist also eine CIF-analoge Klausel für Bestimmungsorte, die nicht Hafen sind, aber CIP kann ebenfalls auf Bestimmungshäfen angewendet werden, ist also für jede Transportart anwendbar.
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