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What Does CIF In International Shipping Mean?

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Sumana Sarmah

Specialist - Marketing @ Shiprocket

July 11, 2023

4 min read

CIF full form

CIF in shipping represents a type of shipping arrangement where the seller is responsible for delivering the goods to the port of destination and arranging transportation, insurance, and other costs associated with shipping. Under CIF terms, the seller is responsible for paying the costs of the goods, insurance, and freight charges until the goods reach the agreed-upon destination port.

CIF Full Form In Export

CIF full form in export stands for “Cost, Insurance, and Freight” and is a commonly used term in international shipping and trade. It is a popular Incoterm, where incoterms define a standardized set of rules used in international transactions to define the responsibilities and costs between the buyer and the seller.

Key Components Of CIF

Cost

The seller is responsible for the cost of the goods, including the price and any additional expenses incurred until the goods are loaded onto the vessel.

Insurance

The seller is required to provide insurance coverage for the goods during transportation to protect against loss or damage.

Freight 

The seller is responsible for arranging and paying for the transportation of the goods from the port of shipment to the port of destination.

Once the goods arrive at the destination port, the responsibility and costs transfer to the buyer. The buyer takes care of any further costs, such as customs clearance, import duties, taxes, and transportation from the port to the final destination.

It’s important to note that CIF only covers the main transport to the port of destination and does not include any costs or risks associated with the goods after they have been unloaded from the vessel.

Role Of CIF In Exports

Pricing and Cost Allocation

CIF in shipping determines the total price of the goods being exported. The seller includes the cost of the goods, insurance, and freight charges in the CIF price. This helps the buyer have a clear understanding of the total cost involved in acquiring the goods.

Shipment and Delivery 

Under CIF terms, the seller is responsible for arranging and paying for the transportation of the goods from their location to the destination port. The seller’s role includes organizing the necessary shipping documents, preparing the goods for export, and ensuring their delivery to the agreed-upon port of destination.

Insurance 

The seller is responsible for obtaining insurance coverage for the goods during transit to protect against loss or damage. The insurance cost is included in the CIF price. It provides the buyer with the assurance that the goods are protected until they reach the destination port.

Risk Transfer 

The risk associated with the goods transfers from the seller to the buyer at the point of delivery to the vessel or carrier. Once the goods are on board, any loss or damage becomes the buyer’s responsibility. The buyer should ensure they have appropriate insurance coverage from that point onwards.

Documentation 

The seller is responsible for providing the necessary export documentation, including commercial invoice, packing list, bill of lading or transport document, insurance policy or certificate, and any other documents required for customs clearance and export compliance.

Customs and Import Duties 

CIF in shipping does not cover customs clearance, import duties, or taxes imposed by the destination country. These costs and obligations are typically the responsibility of the buyer.

Summary: Significance Of CIF In eCommerce Exports 

Understanding the various Incoterms, including CIF, is crucial for both buyers and sellers engaged in international trade as it helps clarify the obligations, costs, and risks associated with shipping goods across borders. A global shipping partner helps to carefully consider the specific terms and conditions of an exporter’s sales contract, including the chosen Incoterm, and ensure clarity and understanding throughout the export process.

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