Silk Bridge Journal

Definition

CIF (Cost, Insurance and Freight) is an Incoterms® rule intended for sea and inland waterway transport. Under CIF, the seller covers the cost of the goods, transportation to the port of destination, and minimum cargo insurance.

It is important, however, to distinguish between cost and risk. Although the seller pays for freight and insurance to the named port of destination, the risk transfers to the buyer once the goods are loaded onto the vessel at the port of shipment.

CIF does not include delivery of the goods directly to the importer's warehouse.

Why Should Importers Know This?

CIF may appear to be a very convenient solution, particularly for first-time importers. The seller arranges the ocean freight and insurance, meaning that the buyer does not have to organize these elements independently at the shipping stage.

Once the goods arrive at the port, however, the importer may still be responsible for costs such as import customs clearance, duties, taxes, port charges, and inland transportation.

For this reason, the CIF price should not automatically be treated as the total cost of importing the goods.

Related Terms

Incoterms® · FOB · CFR · EXW · Landed Cost · Cargo Insurance · Customs Clearance

In Practice

Before accepting a CIF quotation, it is important to check exactly what is included in the price and which costs remain the responsibility of the importer.

CIF can be convenient, but it is not always the most cost-effective option. Compare the total CIF cost with alternatives such as FOB before making a decision.