What is Cost Insurance Freight (CIF)?
Cost Insurance Freight (CIF) is an international trade term that indicates that the seller is responsible for arranging transportation and delivery of goods to the buyer, including the cost of insurance and freight. It is one of the 11 Incoterms (International Commercial Terms) defined by the International Chamber of Commerce (ICC).
What Does CIF Cover?
The CIF term requires the seller to cover the cost of transporting the goods to the buyer, as well as the cost of insurance for the goods while in transit. The seller is also responsible for loading the goods onto the vessel or other means of transport, as well as paying freight charges to the carrier.
What Are the Benefits of CIF?
The CIF term provides a number of benefits to both the buyer and the seller:
- The buyer knows the exact cost of the goods, as the cost of insurance and freight is included in the price.
- The seller is relieved of the burden of having to arrange transportation and insurance for the goods.
- The buyer is protected against any losses during transit, as the seller is responsible for the cost of insurance.
- The seller can benefit from lower freight fees, as they can negotiate better rates with the carrier due to the bulk of their goods.
Conclusion
The CIF term is used in international trade to ensure that the cost of goods, insurance and freight is known in advance, thereby enabling the buyer to plan their budget accordingly. It also ensures that the seller is responsible for arranging the transport and insurance of the goods, providing the buyer with peace of mind. Relevant Links: