Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms are adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. They facilitate the conduct of international business by defining the responsibilities of the involved participants.
This is the fifth article in our series investigating the basic meaning of all 11 Incoterms. We’ve also covered the following: Free Carrier (FCA), Delivered At Place (DAP), Delivered Duty Paid (DDP), and Carriage Paid To (CPT). Today, we’re discussing the Incoterm CIF, also known as Cost, Insurance and Freight (at named port).
To learn more about which trade term is the best for your export,
check out this chart of responsibilities.
What Does the Cost, Insurance and Freight (CIF) Trade Term Mean?
CIF means “the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.” (International Chamber of Commerce)
When Can CIF Be Used?
CIF is used only for vessel transport modes—sea or inland waterway.
Benefits and Considerations of CIF
- The seller must arrange for and pay the costs and freight necessary to bring the goods to the named port of destination.
- The seller delivers goods, cleared for export, loaded on board the vessel. (Source)
- The seller’s responsibility for risk concludes when the goods have crossed the rail of the vessel at the port of unloading.
- The seller is responsible for purchasing insurance.
Learn More about Incoterms and CIF
Looking for more information about Incoterms? Check out the archive of Incoterms-related articles on our International Trade Blog.
To get you started, we’ve chosen several of our most popular articles along with other industry resources:
- The Beginner's Introduction to Incoterms
- An Introduction to Incoterms—Part 2: Why Do Incoterms Matter?
- A Behind the Scenes Look at Incoterms
- Incoterms 2010 Freight and Associated Charges
- From EXW to DDP: Incoterms 2010 Plain and Simple
- Incoterms Lesson: The Danger of Using Ex Works for Your Exports
- Incoterms 2010 and the UCC: A Guide to International and Domestic Terms of Sale
- Incoterms 2010 English Edition
Shipping Solutions export software can help you streamline the process of recording which Incoterms version you’re using and make sure your documentation is correct throughout the transaction. You can try it for free today!