What is included in CIF cost?
Cost, insurance, and freight (CIF) is an international shipping term that describes the seller's responsibility for the cost of shipping, freight charges, and insuring the cargo being shipped via ocean or waterway.
What does CIF mean in Incoterms?
Cost, Insurance and FreightUnder CIF (short for “Cost, Insurance and Freight”), the seller delivers the goods, cleared for export, onboard the vessel at the port of shipment, pays for the transport of the goods to the port of destination, and also obtains and pays for minimum insurance coverage on the goods through their journey to the named ...
How is CIF calculated?
To get the CIF value, simply add the cost or invoice value of the goods and the insurance and freight costs. Here's an example of how to calculate the total duty due on an import consignment that is shipped under CIF and on which basic customs duty, social welfare surcharge and IGST are applicable.
What does CIF 10% mean?
It could be CIF Value + 10% or bare CIF Value. When it is bare CIF Value just invoice-value is declared in the declaration and when it is CIF Value + 10%, 10% over and above the invoice value should be declared. In the words of Mr Anto how you can recover Rs. 110 when you have declared a sum of Rs. 100 only.
Which is better CIF or FOB?
The advantage of buying FOB is that the buyer can get better deals on freight services, unlike in CIF where the buyer has to rely on the freight services chosen by the seller. This is because the seller might be looking to make profit from the freight services. The buyer therefore makes profit from buying FOB.
Who pays CIF freight?
CIF is commonly used for large deliveries, including oversized goods, that are shipped by sea. The seller has the responsibility of loading the shipment onto the vessel. The seller covers the cost of shipping, and insurance.
Who pays for CIF shipping?
CIF is a Shipping Incoterm that stands for: Cost, Insurance, Freight agreement, with the seller holding responsibility for all three.
What is the difference between CIF and DDP?
CIF (Cost, Insurance, and Freight) terms mean that the seller merely assumes responsibility for said goods until they reach the port of destination. DDP (Delivered Duty Paid) refers to the seller paying the duties and taxes of the shipment. These various acronyms are known as INCO terms.
What 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.
Who pays import duties, taxes, and obligations?
All import duties, taxes, and obligations are the buyers. Because the seller is required to procure insurance, the cost of insurance and transportation is baked into the sale price. When a buyer imports under CIF Incoterms, they are not only paying customs duty and taxes on the product price, but also on the cost of freight and insurance.
Does CIF include import duties?
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.
Who is responsible for the loss of goods on a carriage vessel?
All risk is assumed once the goods are on board the carriage vessel. When an issue occurs during the shipping process, the buyer is responsible for rectifying or coping with the losses, not the seller.
Can CIF 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.
What is CIF insurance?
In CIF terms, the seller clears the goods at origin places the cargo on board and pays for insurance until the port of discharge at the minimum coverage. Even though the seller pays for insurance during the main carriage, the risk is transferred to the buyer at the time the goods are on board. The term is used for ocean ...
What is a CIT in shipping?
If cargo doesn’t fit into a container, use CIT. This term is commonly used for agricultural or chemical products where the seller has the expertise and buying power on loading and transportation until the port of discharge and capacity to insure goods. This term is commonly used in bulk cargo, oil and oversized.
Who chooses the carrier in a CIF?
Under CIF terms, the seller is the one who chooses the carrier. Often times, these vessel carriers are the one which offers the cheapest rate possible. You don’t want this kind of contract, right? You would want to have the best services to ensure your cargo arrives at the destination port in good condition and at the right time.
Which is better, FOB or CIF?
However, if you want full control then FOB is the better option because FOB gives you the freedom to choose your carrier. This ensures damage to your cargo will be none, if not very minimal. Under CIF terms, the seller is the one who chooses the carrier.
How long does it take to file ISF?
This is not good news for the new importer because ISF filing has to be done 24 to 72 hours before the shipment leaves the port.
What are the two most common terms for shipping from China?
As mentioned above you have many options when shipping goods from China. However, the two most common terms would be CIF and FOB. The latter is the preferred choice of many experienced importers due to the following disadvantages CIF terms brings to the buyer/importer of goods
Do importers pay for CIF?
As an importer, you would really pay for these charges but the problem with CIF terms is you are presented with substantial charges that are not fully explained to you. Often than not, this is not provided beforehand so you become totally unaware.
Who will pay for goods damaged in transit?
When goods are damaged in transit, who will pay for the damages? The insurance company , you may answer.
Can FOB terms be used to calculate freight?
No! It will definitely not happen. Moreover, FOB terms allow you to readily accumulate the TOTAL cost of freight for your goods.
What is CIF in shipping?
Cost, insurance, and freight (CIF) is a type of agreement for shipping, stating the seller will be responsible for the items until they arrive at port and are claimed by the buyer. The seller’s price includes the cost of the items, the cost of insurance for the items while they are in transit, and the cost of shipping the items to port—cost, ...
What is CIF in logistics?
CIF is a solid option for businesses that haven’t had time to build a network of logistics providers and that are willing to pay for someone else’s expertise in the area.
What are the benefits of CIF for buyers?
CIF is popular among smaller businesses and those new to the shipping game because it allows the buyer to manage a relatively small part of the process, leaving the bulk of the work to the seller.
Is international shipping complicated?
International shipping is the far end of the spectrum, in terms of complexity. The stakes are incredibly high and there are lots of moving parts —insurance, shipping, storage, theft, etc.—for even the smallest transactions. To make it easier for everyone, there are some standard ways to ship and divide responsibilities.
What is CIF in insurance?
CIF (Cost, Insurance, Freight) A pricing term indicating that the cost of goods, insurance, and freight are included in the quoted price. Duty is calculated by adding all costs together. See below for example.*
What does FOB mean in shipping?
FOB (Free on Board) A pricing term indicating that the cost of the goods, including all transportation and insurance costs from the manufacturer to the port of departure, as well as the costs of loading the vessel, are included in the quoted price.
What is CIF shipping?
The terms are also used for inland and air shipments. CIF is considered a better way to buy goods for those who are new to international trade. It might also be a better option for new traders who have small cargos. In CIF, the seller is responsible for transporting goods to the nearest port, loading the goods on the ship and paying freight for ...
What does CIF stand for in investing?
The abbreviation CIF stands for "cost, insurance and freight," and FOB means "free on board.".
What is the rule of thumb in international trade?
A simple rule of thumb in international trade is to buy FOB and to sell CIF. Following this rule can lead to some profit for the trader.
Who is responsible for insurance for goods?
The seller is also responsible for paying insurance for the goods. It is better to buy FOB for those who are already familiar with international trade. These traders have their own forwarding agents and logistic agents in place at the port where the buyer loads the goods to be imported. In FOB trading, the seller is only responsible for taking ...
What Is Cost, Insurance, and Freight (CIF)?
- Cost, insurance, and freight (CIF) is an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer's order while the cargo is in transit. Cost, insurance, and freightonly applies to goods transported via a waterway, …
Understanding Cost, Insurance, and Freight
- The contract terms of CIF define when the liability of the sellerends and the liability of the buyer begins. CIF is only used when shipping goods overseas or via a waterway. The seller has the responsibility for paying the cost and freight of shipping the goods to the buyer's port of destination. Usually, exporters who have direct access to ships will use CIF. However, the buyer …
The ICC and Cost, Insurance, and Freight
- CIF is one of the international commerce terms known as Incoterms. Incoterms are common trade rules developed by the International Chamber of Commerce (ICC) in 1936.1The ICC established these terms to govern the shipping policies and responsibilities of buyers and sellers who engage in international trade. Incoterms are often similar to domestic terms (such as the U.…
CIF vs. Free on Board
- Cost, insurance, and freight (CIF) and Free on Board (FOB) are both international shipping agreements but have distinct differencesbetween them.
Example of Cost, Insurance, and Freight
- As an example, let's say that Best Buy has ordered 1,000 flat-screen televisions from Sony using a CIF agreement to Kobe, a Japanese port. Sony has delivered the order to the port and loaded the product onto the ship for transport. Once loading has been completed, the risk of loss is transferred from Sony to Best Buy. In return, Sony has purchased insurance and pays the freight …
The Bottom Line
- Cost, insurance, and freight (CIF) is an international shipping term that describes the seller's responsibility for the cost of shipping, freight charges, and insuring the cargo being shipped via ocean or waterway. CIF means that the seller is responsible for the costs of transporting the cargo and obtaining insurance to protect the buyer from any damages to the goods during trans…