CIF – Cost, Insurance and Freight paid to (Port of Destination) - Incoterms 2020

Explained

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 and inland waterway transportation only

Doing Business

Deliver happens in the port of loading, the risk for seller ends at the port of discharge and must acquire insurance coverage. In addition to this, the seller must arrange international freight transportation and provide all documentation to the buyer. The seller must also clear export customs.
This term is exclusively used on ocean transportation. 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. The unloading cost is to be covered by the buyer.

The insurance must cover the price of goods plus 10%.

Examples

Buying scrap metal from Thailand (scrap metal also gets insured):

CIF Shanghai Port, China - Incoterms® 2020

Seller and Buyer obligations

THE SELLER’S OBLIGATIONS	THE BUYER’S OBLIGATIONS
1. General The seller must deliver the goods, commercial invoice, and any evidence of conformity.	1. General The buyer must pay the price of goods as agreed.
2. Delivery Deliver the goods by placing on board the vessel in the agreed date or period. In a customary manner at the port	2. Taking Delivery The buyer takes the goods from the carrier at the port of destination
3. Risks All risk of loss/damage until goods have been delivered	3. Risks All risk of loss/damage from the time or end of the period agreed for delivery. If the buyer fails to give notice of the port of destination, the risk is under the buyer.
4. Carriage Contract carriage of goods until port of destination.	4. Carriage No obligation to contract a carrier.
5. Insurance The seller must obtain cargo insurance. Additional insurance coverage under the buyer account.	5. Insurance No obligation to insure the goods.
6. Delivery/transport document Provide the usual transport document.	6. Delivery/transport document Accepts the proof of delivery
7. Export/Import clearance All export clearance expenses (license, security, inspection, etc). Assist with import clearance	7. Export/Import clearance Assist with export clearance. Pay for import clearance and formalities (licenses, security, official documentation).
8. Checking The seller must check, count, weight, mark, and package goods	8. Checking No obligation.
9. Allocation of cost Pay all the cost until delivery, freight cost, and loading cost. Unloading cost if agreed in the contract. Transit costs. Cost of proof of delivery. Insurance. Duties and taxes for export. All costs related to providing assistance in obtaining documents to the buyer	9. Allocation of cost Pay from the time goods delivered. All costs for assistance on getting carriage, delivery, and customs documentation. Pay duties and taxes for import or transit. Any additional cost if the carrier is not nominated or carrier fails to collect goods.
10. Notices Give notice that goods have been delivered on board.	10. Notices Time or period for receiving the goods and name the port of destination.

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