CIF is a term of international trade (known as Incoterm ) to refer to the cost, insurance and freight of maritime or river logistics that both the seller and the buyer of a commercial transaction must respect and negotiate. The Incoterm CIF is generally used for more valuable industrial products and to avoid the costs and documents of customs processes to the buyer. CIF is the Incoterm with the highest coverage in terms of cost, insurance and freight. The rights and obligations of these three aspects cover different stages of logistics and transport.

With the CIF, the seller agrees to cover the shipping, insurance and logistics and transportation documentation from the seller’s warehouses to the shipment of the merchandise to the ship at the port of origin.

Responsibility for the expenses and documentation of the vendor with the Incoterm CIF covers up the term of customs procedures at the port of destination. But mandatory seller insurance only covers until the products are shipped. Therefore it is not responsible if the ship sinks, for example. To reduce the risk of the buyer, the Incoterm 2010 CIF requires the seller to contract at least a minimum insurance that covers the route of the merchandise from the shipment in the port of origin to the port of destination. This insurance must cover at least 10% of the contract concluded between both parties.

The correct way to use the acronym is first to put the Acoterm acronym agreed between buyer and seller, followed by the destination port and the Incoterm version that was used. For example: CIF Port of New Orleans, Incoterms 2010 to ship products by ship to New Orleans.

Incoterm , CIF and FOB

The acronym CIF belongs to one of the eleven current terms of the most recent revision: Incoterm 2010. IncotermInternational Commercial Terms or ‘international trade terms’ is an international classification of the operation of the expenses, insurance, risks and responsibilities of the seller and the buyer with respect to the transportation and logistics of any contractual commercial transaction. To see what does FOB stand for, check this slang dictionary.

The Incoterms are important because:

  • standardize international trade rules with respect to logistics and transport;
  • define the obligations of the parties involved;
  • define the risks of both the buyer and the seller; and
  • Transportation costs are clearly determined and divided.

The Incoterm FOB is the oldest and historically the most used. Its acronym is an acronym in English for Free on Board which means ‘free on board’. This means that the seller assumes the costs and risks of the merchandise until it is loaded to the ship that the buyer stipulated at the port of origin. FOB is an Incoterm generally used for heavy machinery where cargo involves risks and damages.

  • Industrial drawing Definitions of Industrial Drawing - A drawing is a delineation or a stroke that is usually done manually with the help of a brush, pencil or other tool with the [...]
  • devotion Definitions of Devotion - The concept of devotion has its origin in a Latin word that is about the manifestation of a person’s emotion regarding an ideology. It could [...]
  • excesses Definitions of Excesses - The first step that is necessary to take before knowing the meaning of the term excesses is to discover its etymological origin. Specifically, we can [...]
  • Desertion Definitions of Desertion - Desertion is a term linked to the verb to desert: abandon, leave, move away. At the educational level, the term is used to talk about [...]
  • Sustainable Development Definitions of Sustainable Development - The idea of ​​development refers to progress, advance or growth. Sustainable, on the other hand, is what can be sustained with its own arguments. With [...]
  • Deposed Definitions of Deposed - Deposed is a term that derives from deposing, a verb from the Latin word deponĕre that refers to removing someone from their position or position. [...]
  • Demonology Definitions of Demonology - The etymological origin of the word demonology is found in the Greek and more exactly in the union of two words. On the one hand, [...]
  • KNIFE Definitions of Knife - The Latin word cultellus came to our language as a knife. The term refers to a tool used to cut, consisting of a handle and [...]
  • CROSSING Definitions of Crossing - The concept of crossing refers to the act and the result of crossing. This verb, in turn, can refer to the fact of crossing something [...]
  • SCREEN Definitions of Screening - The sieve is a tool formed by a ring that has a mesh. This utensil is used to ahecha : clean grains or seeds. By [...]